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Political Change and Consolidation

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Political Change and
Consolidation
Democracy’s Rocky Road in
Thailand, Indonesia, South Korea,
and Malaysia

Amy L. Freedman
POLITICAL CHANGE AND CONSOLIDATION
© Amy L. Freedman, 2006.
All rights reserved. No part of this book may be used or reproduced in any
manner whatsoever without written permission except in the case of brief
quotations embodied in critical articles or reviews.
First published in 2006 by
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Union and other countries.
ISBN-13: 978–1–4039–6857–9
ISBN-10: 1–4039–6857–8
Library of Congress Cataloging-in-Publication Data
Freedman, Amy L.
Political change and consolidation : democracy’s rocky road in Thailand,
Indonesia, South Korea, and Malaysia / by Amy L. Freedman.
p. cm.
Includes bibliographical references and index.
ISBN 1–4039–6857–8 (alk. paper)
1. Democracy—Southeast Asia. 2. Democracy—Korea (South) I. Title.
JQ750.A91F74 2006
320.959—dc22 2006043789
A catalogue record for this book is available from the British Library.
Design by Newgen Imaging Systems (P) Ltd., Chennai, India.
First edition: November 2006
10 9 8 7 6 5 4 3 2 1
Printed in the United States of America.
This book is dedicated with love to Eric,
Alyssa, and Cameron Kopczynski
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Contents

List of Tables xi
List of Acronyms xiii
Preface xv

Introduction 1
Theoretical Issues: Democracy 2
Transitions to Democracy 4
Economic Crises and Political Change 5
Consolidation of Democracy 10
Case Studies 12
Conclusion 25

1 Thailand: Successful or
Incomplete Democracy? 29
Thai Political History 29
Principal Players in Thai Politics: The Military 33
Popular Protests and Civil Society 35
The 1997 Economic Crisis and the Ratification of
the New Constitution 36
Explaining Political Change 42
Internal Factors: Political Infighting, the Role of the
Military and the Civil Society 45
External Factors: Pressure from the IMF and Global Capital 46
Connection Between the Economic Crisis and Political Reform 47
Changes Under the 1997 Constitution 48
Status of Democracy Today? 49
Conclusion 58
viii ● Contents

2 South Korea: The Final Hurdle


for Democracy 61
Explanation of Korean Politics 62
Democratization in South Korea 64
The Economic Crisis of 1997 and the Presidential Election
of December 1997 65
Did the Elections of 1997 Signify Genuine Change or Further
Democratization? 68
Explanation of Success or Failure of Reform Ambitions 70
Consolidation of Democracy? 71
Changes in Security Relations and in Relations with the
United States 77
Chaebol Reform 79
Conclusion 80

3 Indonesia: Democratization but


Hurdles Still Remain 83
Introduction 83
Background: Indonesian Politics Before 1997 84
Immediate Effects of the Economic Crisis 86
Reformasi 88
Further Changes 89
Elections of 2004 90
Other Lingering Problems 93
Analysis of Successful Reforms 95
The Difficulties in Consolidating Democracy 97
Connection Between the Economic Crisis and Political Reform 98
Conclusion 105

4 Malaysia: Defiance in the


Face of Adversity 107
The Events of 1997–1999 108
The Anwar Debacle 109
The 1999 Elections 112
Explaining the Lack of Political Reforms 113
Malaysian Politics Since 1999 118
Prospects for Political Reform? 120
Role of Islam 122
Contents ● ix

Abdullah: Reform-Minded Leader? 124


Other Obstacles to Change 125
Conclusion 126

Conclusion 129
Case Study Conclusions 130
Applicability of Case Studies to Theoretical Material 135
Final Thoughts 141

Notes 143
Bibliography 165
Index 177
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List of Tables

1.1 GNP growth in Thailand, 2000–2003 53


C.1 Real GDP growth in percentages from 1997 to 2005 140
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List of Acronyms

ABRI The Indonesian military under Suharto


ADIL Pergerakan Keadilan Sosial (Social Justice Movement, Malaysia)
AMIN Angkatan Mujahidin Islam Nusantara (Indonesia)
ASEAN Association of Southeast Asian Nations
BA Barisan Alternatif (National alternative party coalition, Malaysia)
BIN The State Intelligence Agency (Indonesia)
BN Barisan National (Malaysia’s ruling party coalition)
CDA Constitutional Drafting Assembly (Thailand)
DAP Democratic Action Party (Malaysia)
DDC Democracy Development Committee (Thailand)
DI Darul Islam
DJ Kim Dae Jung (commonly referred to as DJ)
DJP Democratic Justice Party (South Korea)
DMZ demilitarized zone
DPR Dewan Perwakilan Rakyat (Lower house of Parliament, Indonesia)
EIU Economist Intelligence Unit
ELSAM Lembaga Studi dan Advokasi Masyarakat (The Institute for Policy Research and
Advocacy, Indonesia)
FEER Far Eastern Economic Review
FPI Islamic Defenders Front (Indonesia)
GAM Free Aceh Movement (Indonesia)
GDP/GNP Gross Domestic Product/Gross National Product
GNP Grand National Party (South Korea)
GOLKAR Joint Secretariat of Functional Groups (Indonesia)
IGGI Inter-Governmental Group on Indonesia
IPPS Institute for Public Policy Studies (Thailand)
IMF International Monetary Fund
ISA Internal Security Acts (Malaysia)
JI Jemaah Islamiyah
KCIA Korean Central Intelligence Agency
KKN Korupsi, Kronyisma, and Nepotisma (Corruption, Cronyism, and Nepotism, Malaysia)
KL Kuala Lumpur
KLSE Kuala Lumpur Stock Exchange
KMM Kumpulan Militan Malaysia
KPK Corruption Eradication Commission (Indonesia)
MCA Malaysian Chinese Association
MDP Millennium Democratic Party (South Korea)
MIC Malaysian Indian Congress
MMI Majelis Mujahidin Indonesia
MOF Ministry of Finance
MP Member of Parliament
MPR Majelis Permusyawaratan Rakyat (Upper house of Parliament, Indonesia)
MUI Council of Ulema (Indonesia)
xiv ● List of Acronyms

NATO North Atlantic Treaty Organization


NCCC National Counter Corruption Commission (Thailand)
NCNP National Congress for New Politics (South Korea)
NEP New Economic Policy (Malaysia)
NGO Nongovernmental Organization
NII Negara Islam Indonesia
NIP National Integrity Plan (Malaysia)
NKP New Korea Party
NMDP New Millennium Democracy Party (South Korea)
NU Nahdlatul Ulama (Indonesia)
OECD Organization for Economic Cooperation and Development
PAD People’s Alliance for Democracy (Thailand)
PAN National Mandate Party (Indonesia)
PAS Partai Islam se Malaysia
PBB Parti Bulan Bintang (Crescent Star Party, Indonesia)
PD Democratic Party (Indonesia)
PDI Indonesian Democratic Party
PDI-P Indonesian Democratic Party in Struggle
PERMANTAU Malaysian Citizens’ Election Watch
PKB National Awakening Party (Indonesia)
PKI Communist Party of Indonesia
PKS Keadilan Sejahtera, Prosperous Justice Party (Indonesia)
PNI Indonesian Nationalist Party
PPP Unity Development Party (Indonesia)
PRM Parti Rakyat Malaysia
RDP Reunification Democratic Party (South Korea)
SBY Susilo Bambang Yudhoyono
TNI The Indonesian National Military (Tentara Nasional Indonesia)
TRT Thai Rak Thai (Thai Love Thai)
TMB Thai Military Bank
ULD United Liberal Democrats (South Korea)
UMNO United Malays National Organization
URI Open Our Party (South Korea)
Preface

T
his project began with a summer research project on the
connections between economic crisis and political change. With
research assistance from Rachel Ellenport and later Stephen
Cochi and Vanessa Vincent, I became familiar with the theoretical
literature exploring the relationship between economic problems and
political consequences. We then dug further into the details of the popu-
lar and political reactions throughout Asia to the crisis. The puzzle of why
Malaysia’s leader Prime Minster Mahathir was able to hold on to power
seemed directly linked to his decision not to turn to the IMF for help.
But, clearly, the IMF was not itself the agent of change. So, my research
continued and I examined popular protests, elite politics, and relation-
ships between leaders in power and opposition forces. As the book details,
successful political reform is a result of a mixture of these factors.
Of all the countries discussed in the book, Indonesia has clearly
been transformed the most. Despite the continued challenges that the
country faces, I remain amazed by all the positive changes that have hap-
pened there over the last seven years. In the aftermath of Suharto’s
authoritarian New Order, mostly free and fair elections have been held,
the press is no longer muzzled, and a wide variety of civil society organi-
zations articulate and advocate a range of interests. Ultimately,
Indonesia, and to a lesser extent Thailand and South Korea, need to
wrestle with problems of corruption and the balance of power among
political institutions. These shortcomings are not unique to Asia or to
new democracies, but they are important elements of the democratiza-
tion process. It is vital in a democracy that people feel the political and
economic systems are fair and transparent. Of course, democracy is not
a fixed state, it is always changing and evolving. For Indonesia, South
Korea, and Thailand democratization is a process without a predeter-
mined end. Malaysian politics too is an open question. The groundwork
is certainly there and if a reform-minded leader or a set of elites comes to
xvi ● Preface

power in the future, I have no doubt but that Malaysian political reform
will occur quite rapidly. The promise and possibility of a more fair polit-
ical system and better economic conditions are what make Asia so inter-
esting to study.
I am in debt to a number of people for making this project possible.
First, I want to thank Franklin & Marshall College for its generous sup-
port. Through the Hackman scholars program the college provided
funding for research assistance during the summers, and the college gen-
erously granted me a research leave in order to write the manuscript.
I appreciate my colleagues’ encouragement and suggestions on my work
and for putting up with my absence during my junior research leave and
a subsequent sabbatical. Thanks are due to my friends and contacts in
Asia, as well as to conference panelists, discussants, and participants who
pointed out shortcomings and made suggestions for improvements.
I appreciate my editor Toby Wahl’s ideas and feedback on the work as
well as the cogent and constructive criticisms of the external reviewers.
As always, errors and omissions are entirely of my own doing.
Lastly, I want to thank my family—Kevin, Eric, Alyssa, and even
Cameron—they have sustained me with their love and confidence
throughout the project.
Introduction

I
n 1997 and 1998 Asia was hit by a severe economic crisis. Most
countries in the region (from South Korea through Southeast Asia)
were faced with massive currency fluctuations, banking crises, and
plummeting stock markets. These economic problems were compounded
by political turmoil. Given Asia’s experience of massive financial diffi-
culties coupled with political upheaval (specifically in Thailand, South
Korea, Indonesia, and Malaysia), this book begins with a broad question:
what is the relationship between economic crises and political reform or
democratization?
In 1997 Thailand and South Korea held democratic elections and
opposition parties came to power. In Indonesia, Suharto’s long period of
authoritarian rule came to a crashing close when riots and demonstra-
tions forced him to become more and more politically isolated and
finally compelled him to resign. In Malaysia, the ruling coalition was
able to maintain power but a new sense of political activism developed in
the wake of Prime Minister Mahathir’s firing of his popular deputy
Anwar Ibrahim. When parliamentary elections were held in Malaysia in
the fall of 1999 the ruling party faced two challenges: a new political
party was formed based on a desire for greater social justice, democracy,
and civil rights; more significantly the Islamic opposition party, PAS
(Partai Islam se Malaysia), won an unprecedented number of seats at the
state and national levels. This brings me to my next set of questions: how
can we explain the variation in political change in Asia as a result of the
economic crisis? In order to answer this more specific question, I have
looked at the conditions leading up to the political transformations and
at institutional differences such as elite coalitions and the party struc-
ture, the nature of political protests (from whom did calls for change
come, and were demonstrations peaceful?), and the conditions imposed
by the International Monetary Fund (IMF) to try and understand what
impact these had on political changes.
2 ● Political Change and Consolidation

In Indonesia, Thailand, and South Korea the challenges to entrenched


political leaders and practices caused many to hope that a new era of
greater openness and accountability would continue. Nine years have
passed and additional elections have taken place, new issues have replaced
economic crises as the most important agenda items. Have political
reforms stuck and been successful at truly democratizing or reforming
politics, in other words, have greater levels of democracy been achieved?
The answer is a qualified yes. Changes that occurred to the political
landscape have not been overturned, however, the new elites are not
necessarily the harbingers of decency and the promoters openness that
people hoped for and it is not at all clear that liberalization has been fully
realized or institutionalized in South Korea, Thailand, or Indonesia. As
for Malaysia, the apparent weakness of the ruling party, United Malays
National Organization (UMNO), in the 1999 elections has vanished.
Skillfully using the aftermath of 9/11 and the global war on terror, Prime
Minister Mahathir capitalized on negative images of political Islam to
regain support once directed at PAS—the main opposition party that
calls for the implementation of an Islamic state.1 Also, he was able to
scare many in the electorate by continually raising questions about what
PAS might do as an Islamic party in power.
Unfortunately, economic crises are not new phenomena. Several
financial downturns have occurred in other regions of the world at other
points in time. What then does the literature tell us about the relationship
between economic crises and politics? Is the situation in Asia unique or
does the theoretical work on economic crises and regime change describe
the current dynamic in the region? The questions posed in this book fall
into different sets of political science literature. The first set of questions
relates to the relationship between economic crises and political change,
and the questions are fundamentally about how transitions to democracy
work. The second set of questions is comparative in nature. Why do we
see changes in some places and not in others? Lastly, the book tries to
tackle questions about democratic consolidation; what does it take to
create institutions, cultures, or systems that can sustain a more open,
more fair political system? This chapter provides a theoretical overview
of the relevant literature on these issues and then gives a brief introduc-
tion to the four countries compared in this study. Finally, a preview of
the book’s conclusions is presented.

Theoretical Issues: Democracy


There are a variety of ways in which political scientists use and define the
word democracy, and even the notion that one can “define” democracy is
Introduction ● 3

sometimes argued over. In everyday language, and really in the larger


goal of this book, democracy refers to an ideal political system based on
fairness, accountability, justice, and rule of law, as well as to a set of practices
that aim to achieve the ultimate goal: a fair and just system where rulers
are accountable to the citizens. There are procedural views of democracy,
whereby it involves specific characteristics such as free and fair elections,
legislatures, the rule of law, and other factors. Also, there are more
outcome-oriented approaches to understanding democracy; how fair is
the system, how well does the political order respond to needs of citizens
and does it protect citizen rights? Robert Dahl, who has been writing
about democracy for decades, outlines in his most recent article a set of
institutions that are necessary for a large-scale democracy to function.
He argues that the political institutions of modern representative demo-
cratic government are: elected officials, free, fair, and frequent elections,
freedom of expression, alternative sources of information, associational
autonomy, and inclusive citizenship.2 While this is a fairly comprehen-
sive list, and he clearly shows in his article why these institutions are so
important, there seems to be a critical element missing—protection of
rights, particularly for unpopular or minority (they could be ethnic, reli-
gious, caste, or any other type) groups. Likewise, having the “right”
institutions is no assurance that the system will work in the way the laws
and procedures intended. Institutions and individuals can subvert,
ignore, or flout the best-intended laws. Hence, one should ask not just if
the institutions and systems necessary for democracy exist, but also if
they are functioning as intended? If not, what conditions need to exist or
what needs to change in order for the laws and institutions to function
as envisioned?
In this book several terms are used in similar ways: democratization,
political reform, political liberalization, political change. While many
will take issue with the impreciseness of using these terms interchangeably,
what I am interested in here is the process of political change toward a
more open, more accountable, more fair political system and to me this
is the essence of democracy or democratization. Having relatively free
and fair elections is a starting point for democracy, but it is only a first
step. In order for elections to be meaningful, a realistic chance of different
groups winning the election and affecting policy change once they are in
office must exist. For this to happen, many of the elements Dahl men-
tioned, such as access to a wide range of information, the right of free
association, inclusive citizenship, must exist but these may not be
enough to check the power of other actors, such as the military or cor-
porate interests. For a political system to reach a more ideal state that
I am envisioning, political institutions and processes needs to be more
4 ● Political Change and Consolidation

transparent and the playing field more level. And, most importantly, the
state and its elected officials need to be committed to upholding the very
laws that they create and supposedly enforce. This is what I have in mind
when I talk about a system being “fair.”

Transitions to Democracy
Keeping these elements of democracy in mind, the next theoretical task
is to understand transitions to democracy. There is a vast body of scholarly
work on transitions to democracy. The literature that has the most rele-
vance to what I am doing here is a cluster of work that came out in the
late 1980s and early 1990s,3 as scholars offered explanations of the
recent wave of countries undergoing democracy. While terminology
often differs, as does methodology, there are some common elements in
much of this work. A transition to democracy could happen in one of
several ways, but in all of the ways elites within and outside of power are
seen as the most important actors. Democracy can evolve when a reform-
minded leader takes the reigns of power and marginalizes hard-liners in
power; it can come about because of a negotiated process between
reform-minded opposition leaders and allies in power, or when an old
order collapses and is replaced by democratically inclined newcomers.
This literature was a departure from earlier work on democratization,
which was sometimes referred to as “modernization theory.” Modernization
theory’s basic argument was that democracy happened from below when
citizens grouped themselves together with other like-minded citizens to
assert their interests on the state. Democracy, in other words, was the
product of the actions of civil society. Schmitter and Diamond4 theorize
the role of groups or associations in society as contributing to or articulating
the demands and interests of various sectors of the population. In such a
position civil society is poised to play a significant role in encouraging
greater accountability and democratization. In fact, Diamond outlines
the ten democratic functions of civil society:

1. setting the limit on state power;


2. supplementing the role of political parties;
3. developing democratic attributes;
4. creating channels for the articulation, aggregation, and representation
of interest, and generating opportunities for participation and
influence at all levels of governance;
5. mitigating the principal polarities of political conflicts;
6. recruiting and training new political leaders;
Introduction ● 5

7. monitoring elections;
8. disseminating information and aiding citizens;
9. supporting economic reform;
10. strengthening the democratic state.5

One particular question that has generated a great deal of scholarly literature
has been the autonomy of civil society from the state. 6 While this book
does not weigh in explicitly on this debate, I have assumed that in order
for civil society to have an impact on democratization it must be at least
somewhat free from state domination.
When scholars first envisioned transitions from authoritarian rule,
they looked at the processes that Europe and the United States went
through over two hundred years ago. What many argued was that economic
development would lead to the creation of a middle class. This middle
class would be more likely to form associations and groups to protect
and promote their interests. Eventually, these groups would play a larger
role in demanding accountability, protection of private economic inter-
ests, and responsiveness from the government. These demands would
evolve into greater political openness and ultimately into democracy. In
democratic states, interest articulation comes from a variety of sources
within society, but the preferences that are best able to be heard are those
coming from well-organized, well-funded, and well-connected groups;
civil society rather than just mass mobilization or participation. During
times of crisis, does civil society play an important role in demanding
accountability and change, or does the impetus for change come from
elsewhere? To answer this, I turn to the literature that deals more specifi-
cally with the relationship between economic crises and political change.

Economic Crises and Political Change


Earlier scholarship on economic crises and political change seemed to
fall into two distinct camps. Some scholars, such as Samuel Huntington,
Adam Przeworski, and Londregan and Pool, found that economic prob-
lems trigger political instability and an end to democracy, whereas other
studies (such as those by Raymond Duch and Karen Remmer) showed
that fiscal crises helped consolidate democracy. What can the turmoil in
Asia tell us about the link between economic conditions and political
change and about the larger theoretical debate? This book finds that the
economic crisis in Asia facilitated and strengthened democracy. Where
this research departs from earlier work on crises and political change is
my finding that political change comes as much from shifts in political
6 ● Political Change and Consolidation

elites’ preferences and coalitions as from popular demands of a frustrated


citizenry. While I show that political mobilization and civil society
groups were important components of the reform movements, they were
most significant in having supported and given clout to elites within the
system to take control. In this way, my work follows more closely the
arguments of the transition literature than that of the modernization
literature.
The point that economic conditions impact politics is hardly new and
to some people it would seem obvious to say that economic crises lead to
significant political change. Bill Clinton’s campaign mantra in 1992,
“it’s the economy stupid,” illustrates the ability of political challengers to
use economic problems as a weapon to defeat an incumbent. Even more
than giving ammunition to opposition candidates and parties in their
quest for power, many have found a link between economic upheaval
and political instability. Diamond and Linz found that “an economic cri-
sis represents one of the most common threats to democratic stability.”7
Much scholarly literature has argued that economic turmoil threatens
democratic regimes, particularly new democracies, and that democracies
are less able to implement policies that will effectively ameliorate
economic crises. For example, Przeworski argues that because of the
political risk involved in adhering to fiscal austerity programs, democra-
tic regimes would be less likely to “do the right thing.”8 Likewise,
Huntington argues that “modernity breeds stability, but modernization
breeds instability.”9 As an elaboration on this point, Londregan and Pool
find that economic “backwardness” is a necessary condition for coups to
occur, but that the process of modernizing (if it involves economic
growth) may inhibit coups. They would, however, agree that if economic
crisis occurs and economic growth turns into stagnation or decline, then
a change in the executive (a coup) is more likely to transpire.10
In contrast to the arguments presented earlier, much scholarship has
actually found that economic crises can help consolidate democracy.
Raymond Duch looked at former communist regimes in Eastern Europe
and found that regardless of “civic culture” (elements of which include
levels of education and access to information) citizens were not likely to
give up on democratic institutions and capitalism because of economic
problems. He found that citizens do not abandon democracy and capitalism
because they have negative memories of authoritarian regimes and
because they value having a political choice. People understand the
difference between institutions and politicians. Therefore, they may vote
out incumbents and replace them with new leaders, but most citizens do
not favor an end to the democratic political order.11
Introduction ● 7

Similarly, Karen Remmer looked at the effect of economic crises on


electoral outcomes in Latin America from 1982 to 1990. Unlike
Diamond and Linz, Remmer found that during the debt crisis in Latin
American in the 1980s, economic woes were bad news for incumbents,
but people did not turn to extremism and there were few breakdowns of
democracy.12 In fact, instead of the disintegration of democracy during
the economic crisis of the 1980s, democracy appears to have been con-
solidated or strengthened. Remmer found that the relationship between
economic conditions and electoral results was impacted by the nature of
the party system. Those countries with robust two-party systems were
the most stable. It did not seem to matter how many years a country had
been democratic.13
Gasiorowski bridged the disagreement between those who argued that
economic crisis inhibits democracy and those who found that it helps
consolidate democracy. Using event history analysis, Gasiorowski found
that from 1950 to 1970 economic crises hindered democratization, but
after the 1980s crises may have facilitated democratization. He further
examined if the same independent variables were able to explain both the
consolidation and the breakdown of democracy. He found that this was
not really the case. Gasioromski questioned if economic crises led to
democratic transformation or if they inhibited a transition to democracy.
The evidence did not support either hypothesis, “economic crises do not
simply undermine the legitimacy of whatever regime is in power, thus
triggering change in one direction or the other.”14 Instead, Gasiorowski’s
analysis argued that a number of other variables should be pointed to as
determinants of regime change. For example, rather than just looking at
socioeconomic or social–structural conditions, he looked at the charac-
teristics of economic crises and found that inflationary crises facilitated
regime change in some cases, whereas recessionary crises led to regime
change in other circumstances.
The literature reviewed earlier has one key element in common: there
is an assumption of political mobilization or participation from a fired-
up citizenry. That is, democracy is either consolidated or undermined
because popular discontent about the economic situation fuels politi-
cization, either in a destructive way when democratic institutions are
flung aside, or in a manner in which entrenched political elites are swept
out of power while political institutions remain viable and credible.
Although much of this scholarship is useful as a starting point for under-
standing the relationship between economic crisis and political change,
it does not seem to provide a complete picture of what happened in Asia
from 1997 to 1999. On first glance it appears that one could argue that
8 ● Political Change and Consolidation

the economic crisis of 1997 brought about greater democracy in Asia:


opposition parties won elections in South Korea and Thailand, new signs
of social unrest and political activism appeared in Malaysia, and
President Suharto was forced to resign after thirty years of authoritarian
rule in Indonesia. However, it is far too simple to say that a causal chain
of events took place: economic crisis → popular politicization → greater
democratization. On closer inspection the events did not neatly conform
to this model.
In Indonesia the economic crisis hit in the summer of 1997 and there
were demonstrations and acts of violence throughout the rest of 1997
and in 1998. Yet, it was not until May of 1998 that Suharto finally
stepped down. In South Korea economic turmoil began in late fall of
1997, just as the presidential campaign got underway. In years past, stu-
dent and worker activism in South Korea was quite common. Yet, the
economic crisis neither brought on extraordinary protests, nor did the
presidential candidates attempt to effectively use the crisis to their
advantage. Opposition candidate Kim Dae Jung won the election in part
because people were disappointed with Kim Young Sam and his party due
to corruption and because of President Kim’s decision in 1992 to join
Roh Tae Woo’s Democratic Justice Party (DJP), a party that was associ-
ated with the previous authoritarian order. While Kim Young Sam could
not run for reelection, the constitution barred him from doing so, the
candidate from his party was tainted by his weaknesses. In Thailand a
revised constitutional charter that aimed to weaken money politics,
directly elect senators and local officials, and create oversight bodies to
monitor corruption during elections (among other things) seemed dead
in the water in the period just before the economic crisis. When the crisis
hit in July, a groundswell of popular support for the new constitution
and opposition to the old political order and the changing dynamics
among political elites combined to effect the likelihood of change.
In Malaysia it was less the economic crisis that brought people into
the streets to demonstrate against Mahathir than the sense of injustice
about the way the prime minister drove out and allowed judicial
proceedings to be taken against Anwar Ibrahim. By the time Mahathir
called for parliamentary elections at the end of 1999, the economy had
rebounded somewhat and the ruling coalition returned to power, albeit
losing a number of seats in parliament and an additional state
government.
By itself, mass mobilization as a result of economic turmoil cannot
explain political change. The missing element was that certain political
elites were able to take advantage of this activity by citizens and use the
Introduction ● 9

economic crisis to position themselves to either retain their leadership


(like Mahathir) or outmaneuver entrenched leaders and help bring about
political change. Only by looking at internal political dynamics and
coalitions can we explain when and why political change and democrati-
zation occurs and why it might not. This statement is not particularly
surprising. As Keohane and Milner have explained, one can no longer
understand domestic politics without understanding the world economy
and the links between the two. Internationalization affects the opportu-
nities and constraints facing social, political, and economic actors. For
Keohane and Milner the dependent variables were policy preferences of
key actors and the national policies and policy institutions themselves.15
This argument expanded on the “second image reversed”16 literature of
Gourevitch and Katzenstein.17 Writing before the economic crisis hit
Asia, Keohane and Milner seem to have almost predicted the region’s
events. They found that increased international trade and capital move-
ment made a larger proportion of each country’s economy vulnerable to
world market pressures. In other words, domestic economies were (and
are) more sensitive to international price trends and shocks. Economic
shocks from abroad can thus trigger political crisis that can reshape
domestic politics.18 Domestic politics changed not because of mobiliza-
tion from below but because of realignments and shifting political coali-
tions among elite players.
Bienen and Gersovitz have also pointed to the centrality of elite
coalitions in understanding political stability. Their work directly
addressed the impact of coming under an IMF program for domestic
politics. Bienen and Gersovitz argued, “Economic and political concerns
work in opposite directions. Politics calls for bargaining and incremental
change . . .; economics often argues for rapid adjustments.”19 “A regime
that has lost legitimacy for other reasons becomes especially vulnerable to
its opponents during negotiations with the IMF and during the imple-
mentation of an IMF package.”20 Since political elites might be divided
on the question about whether to accept IMF conditions and/or how to
implement necessary changes, it is logical that political instability,
derived from a lack of elite unity, may result from IMF involvement.
The literature has offered various perspectives on the broad question
of the relationship between economic crises and political change. While
much of it has pointed to a positive relationship between economic
crises and democratic political reforms, this book finds that the catalyst
to reforms is not just mass mobilization, but the impact the mobilization
and the crisis have on the ability of reform-minded elites to consolidate
their own power within the highest institutions of political control.
10 ● Political Change and Consolidation

Consolidation of Democracy
In the flurry of scholarship that was produced in the happy aftermath of
the fall of communism, most of the focus was on the end of the author-
itarian order. It quickly became apparent that ending repressive rule was
not the same as creating a solid, enduring system that guaranteed free
and fair elections, protection of civil rights and civil liberties, an open
press, and some sort of checks and balances or a sharing of power among
political institutions in general.
Consolidation of democracy is generally taken to mean a system that
is unlikely to break down, that is, we can expect it “to last well into the
future.”21 This seems simple, but it poses significant problems of opera-
tionalization and measurement.22 In order to describe and even to try
and predict consolidation, scholars look at the institutional or structural
underpinnings of the regime, and/or the attitudes and behavior of key
actors. In simple terms, do leaders play by the rules of the game and not
see themselves as above the law; are they willing to lose elections and
abide by the results? Schedler found that scholars pronounce a democra-
tic regime to be consolidated when leaders behave democratically, when
major political actors acquire democratic attitudes, and when the socioe-
conomic and institutional foundations for democracy are in place.23
Linz and Stepan use as a working definition of a consolidated democracy
the following criteria:

Behaviorally, a democratic regime in a territory is consolidated when no


significant national, social, economic, political, or institutional actors
spend significant resources attempting to achieve their objectives by creating
a non-democratic regime or turning to violence or foreign intervention to
secede from the state. [Indonesia, South Korea, and Thailand all seem to
meet these conditions.24]
Attitudenally, a democratic regime is consolidated when a strong
majority of public opinion holds the belief that democratic procedures
and institutions are the most appropriate way to govern collective life in a
society such as theirs and when the support for anti-system alternatives is
quite small or more or less isolated from the pro-democracy forces. [There
may not, in fact, be strong Korean or Thai public opinion supporting this.
Indonesians seem to demonstrate these criteria.]
Constitutionally, a democratic regime is consolidated when govern-
mental and nongovernmental forces alike, throughout the territory of the
state, become subjected to, and habituated to, the resolution of conflict
within the specific laws, procedures, and institutions sanctioned by the
new democratic process.25 [Thaksin seems to have had little regard for
Introduction ● 11

these elements; Indonesia is still struggling with this; in South Korea leaders
seem more habituated to this, but corruption is still a huge problem.]

Linz and Stepan have also detailed five interacting elements that must
exist in order for such consolidation to take place. Conditions must exist
for civil society to play a role in politics, there must be relatively free and
valued political society, rule of law to protect freedoms, a state bureau-
cracy usable by the government, and an “economic society” (a way of
mediating or balancing between state and market).26
One can assess these conditions over time, and perhaps feel that
democracy might be secure in the future if there have been successful
elections and transfers of power to different leaders. However, as
investors in the stock market know, past performance may not be an
indication of future success. In fact, as the case studies will show, it is not
clear that all of these criteria have been met in the countries where suc-
cessful political reforms were triggered by the economic crisis. In offer-
ing an explanation about the variation in political transformations
connected to the economic meltdown in Asia in 1997, it is necessary to
look carefully at what was different about the way the crisis was handled
in South Korea, Indonesia, and Thailand and to compare that with what
happened in Malaysia.
This book demonstrates the following arguments: economic crisis
leads to democratization when a leader loses political allies. Variation in
this process is attributable to the following:

1. The easier it is for opponents to challenge the policies of an


incumbent government, the more responsive the system will be to
societal pressures. Thus, political change will be less dramatic, as
well as faster and easier (i.e., fewer protests and violence) in stable
democracies than in authoritarian regimes.27 This was the case in
South Korea.
2. Where there is a credible opposition party (or parties), those who
are disgruntled will look to these organizations for support and
assistance in meeting their demands. This was the case in Thailand.
Where there is no viable alternate group already in a position to
gain politically, those who are angry about the economic crisis will
seek regime change from outside the system. This was what happened
in Indonesia.
3. IMF prescriptions can “make or break” the regime in power based
on whether or not its policy recommendations instill domestic
12 ● Political Change and Consolidation

confidence or further the sense of panic and uncertainty. Also,


IMF prescriptions changed elite coalitions based on who supported
and who opposed IMF policies. More about this will be discussed
later. In part, this accounts for the difference between Malaysia
and the other countries (South Korea, Thailand, and Indonesia)
examined here.
4. The political impact of popular protests: popular protests will
have greater impact if they are from an easily identifiable political
constituency group (labor or the military, e.g.), if the protestors
are well organized, and if they connect themselves to a coalition in
or outside of power that broadens their base of appeal (South
Korea and Indonesia).

Case Studies
The book contains chapters on, Thailand, South Korea, Indonesia, and
Malaysia to gain a better understanding of the relationship between
economic crises and political change. For each country I look at the polit-
ical and economic climate at the time the financial crisis begins. Then I
examine the incumbent regime’s reaction to the economic crisis, and if
there is popular support or opposition to official government policy. The
chapters detail the IMF’s intervention (or lack thereof in Malaysia) efforts
and how these affected particular elites in power and public opinion
about the crisis. Overall, I try to explain the internal political dynamics as
they shift in confronting the economic crisis. Finally, the political
changes that occurred in all three countries will be explained, and the
book will examine and analyze what has happened politically since 1998.
Specifically, I try and analyze if political reforms have really taken root,
and if democracy has progressed, regressed, or stagnated and why.
Particular attention will be paid to changing levels of support for various
leaders (incumbents and challengers) and how the financial crisis
impacted the outcome of so much political uncertainty. Then each chap-
ter turns to the question of democratic consolidation and what the
achievements of and obstacles to greater democracy might be.
In order to understand what was happening in Southeast Asia in 1997,
I provide here a brief summery of the key events in the four countries exam-
ined, and how these events relate to my questions about democratization.

Indonesia
On July 8, 1997, Indonesia faced a currency crisis that badly devalued
the rupiah. Throughout the summer Indonesia tried to cope with the
Introduction ● 13

falling rupiah on its own. Suharto and his closest allies were unable to
decide if they wanted to accept the terms offered by the IMF for assis-
tance in stopping the economy’s free fall. Finally, in November 1997, in
an effort to calm domestic and international fears of inaction, Suharto’s
government closed sixteen insolvent banks and announced additional
austerity measures. Instead of increasing confidence in those financial
institutions that were sound, financial panic occurred and mass demon-
strations erupted across the archipelago. Although it was announced that
US$33 billion in loans would be made available to Indonesia, Suharto
was still unable to agree to terms of a bailout from the IMF. Finally, in
January 1998, Suharto agreed to a large rescue package and a set of
economic prescriptions from the IMF. Some of the requirements
included curbs on official favoritism for companies controlled by his
children and his closet allies, and reductions in subsidies.
In January 1998 Suharto announced that he would seek reelection
later that year. It would be his seventh term as president of Indonesia. He
also hinted that he would choose B.J. Habibie as his next vice president.28
Suharto’s actions only served to further weaken investor confidence
about reforms in Indonesia’s economy, and public disapproval over how
he was handling the economic crisis was growing alarmingly. Habibie
was viewed as a poor choice for vice president; he was best known for
advocating nationalist economic policies and being loyal to Suharto.
Mass demonstrations increased throughout Indonesia in early 1998 and
on February 14 they turned violent. Rioters in Jakarta, Medan, and other
cities burned and looted shops. Churches were vandalized and burnt.
Protests continued in major cities during February, although police
sometimes tried to break them up; at times police and military units
stood by while protestors destroyed private property and even attacked
other people, mostly ethnic Chinese. On March 10, 1998, Suharto was
reelected by the legislature and was given significant new power to con-
front the economic crisis. His reelection triggered some of the largest
and most fiery antigovernment demonstrations in thirty years. Adding to
the pile of criticism against Suharto, he appointed several controversial
figures to his new cabinet, including his eldest daughter and Bob
Hasan.29 It seemed that Suharto was more interested in surrounding
himself with allies than in selecting the best people for higher offices.
Protests continued into the spring.
May began with violent riots in Medan and other cities over price
increases resulting from reductions in government subsidies for cooking
oil and other necessities. Thousands of students continued protesting
against the regime. Some very notable and high-profile individuals
began calling for Suharto to step down. Muslim leader Abdurrahman
14 ● Political Change and Consolidation

Wahid called for Suharto’s resignation and he pled with the nation to put
an end to the hostility toward the Chinese community. Wahid’s outspo-
kenness against the government encouraged the students to continue
their protests and to take them outside the campus gates to the streets.30
On May 13, 1998, troops opened fire on thousands of student pro-
testors at Trisakti University. Six were killed and dozens wounded. The
next day protests turned horrifically violent. Hundreds of stores, vehicles,
offices, and homes were burned and looted.31 Most of the anger and
damage was directed at Indonesia’s ethnic Chinese minority because of
their perceived business ties with Suharto.32
On May 21, 1998, after thirty-plus years in office, Suharto resigned
as president of Indonesia. B.J. Habibie became president and announced
that he would stay in office only a year while the country planned for
new elections.
The most free and open elections since the 1950s were held on
June 7, 1999. Forty-eight parties competed for seats in parliament. The
parties that won the most seats in the legislature were: Megawati
Sukarnoputri’s PDI-P, the Indonesian Democratic Party in Struggle,
which captured 34 percent of the popular vote; Habibie’s Golkar Party,
which was still strong because of dense organizational networks estab-
lished under Suharto, received 20 percent of the vote; Abdurrahman
Wahid’s (aka Gus Dur) National Awakening Party (PKB) and Amien
Rais of the National Mandate Party (PAN) also received large number of
votes. The president was to be chosen by an electoral-college mechanism
in October of 1999. Despite winning the most seats in the legislature,
Megawati (daughter of Indonesia’s first president, Sukarno) refused to
network and build up a base of support among others in power. When
Habibie withdrew from contention at the last minute, Wahid was chosen
by the People’s Consultative Assembly to serve as president.33 Although
only in office for nineteen months before being impeached because of
his inability to address continuing corruption at the highest levels, eco-
nomic disorder, and separatist movements, Wahid’s presidency was seen
as a period of significant political reform. New laws were passed to
restructure political institutions and improve civil rights and liberties,
and a greater climate of openness took hold.
There were four interrelated factors that contributed to pushing
Suharto out of office in May 1998: the economic crisis, the protests and
riots, the miscalculations of the IMF, and the internal pressures from
other political elites. The nature of the economic crisis and the upheaval
that resulted from it are described earlier. But, what exactly did the IMF
recommend and what were the effects of these prescriptions?
Introduction ● 15

IMF Recommendations
On October 8, 1997, Indonesia formally turned to the IMF for aid with
managing the economic crisis. After much negotiation with Suharto, the
first IMF loan of US$43 billion was made on October 31. Indonesian
finance minister Mar’ie Muhammad and other technocrats in Suharto’s
cabinet, such as Sudrajdad and Widjoyo Nitisastro, also helped negotiate
the IMF package. The first loan was to last for three years and the
Indonesian government was to follow contractionary economic policies.
The government was supposed to reduce expenditures and close insol-
vent banks. The overarching goal behind these prescriptions was to
restore investor (and domestic) confidence. The program also attempted
to stabilize exchange conditions and oversee the restructuring of the
external current account. These recommendations were to lay the foun-
dation for the resumption of economic growth.34
In addition to the fiscal requirements of the IMF, the Indonesian
government was also mandated to further liberalize and deregulate its
market. For example, Indonesia was encouraged to remove many of the
country’s protective trade barriers over the three-year period of the loan.
The IMF sought to persuade the Indonesian government to dissolve
monopolies and allow for greater transparency in business decision
making.35 It actually got involved outside its normal parameters by creating
policy to dissolve the clove and plywood monopolies in Indonesia.36
None of these reforms was able to curb inflation, slow the further decrease
in the value of the rupiah, or halt skyrocketing unemployment.37 Instead,
the economy slowed even further. On January 15, 1998, Indonesia
negotiated a second IMF program. This loan called for the removal of
subsidies on food and energy.38 Instead of just reducing government
expenditures, the removal of subsidies further inflamed discontent and
contributed to escalating protests and violence.
On April 8, 1998, the IMF and the Indonesian government agreed on
a revised program, since Suharto had failed to fulfill the first and second
IMF accords. Again, the IMF pressed for greater liberalization of the
economy in exchange for the US$43 billion. To what extent did Suharto
abide by these prescriptions? For the most part, Suharto acted to protect
the wealth and power of his family and close friends. Food and fuel sub-
sidies were removed but monopolies and corruption continued. Examples
of Suharto’s inconsistencies included the closing of sixteen banks, as
per the IMF’s request in November 1997, and then letting them
reopen under new names. The 70 percent increase in petrol prices and
60 percent increase in electricity rates that were enacted were part of
what drove protestors to the streets.39 The pain was not shared equally in
16 ● Political Change and Consolidation

Indonesia—the general population felt squeezed whereas Suharto’s


family and allies were able to escape censure. While the demonstrations
began in February as a plea to do something about inflation and unem-
ployment, by April and May protests escalated into bold demands for
Suharto’s ouster. The student protests were significant in and of them-
selves as a bold criticism of authoritarian rule, but they were also crucial
because of the increasingly wide public support offered to the students
from broader society.

A 53-year-old farmer, Ansuwolo, proudly recounts his efforts to dissuade


his son, a Yogyakarta policeman, from beating up protesters. He says
many of his neighbors are also rooting for the students as they watch
scenes of the demonstrations broadcast on the nightly television news.40

The other significant element of the protests was that they provided
opportunities for religious and secular activists to work together. “In
Yogyakarta, young Muslim women in headscarves have joined flower-
waving nuns at campus rallies.”41 Likewise, on May 1, representatives of
thirty workers’ groups in Greater Jakarta met with student leaders and
the next day several workers addressed the student rally. Student–worker
links were also made in Bandung and Surabaya.
The violence and the damage from the riots caused even some of
Suharto’s staunchest allies to start questioning his leadership. After
months of turmoil, on May 18, 1998, House Speaker Harmoko publicly
offered Suharto three options: he could reshuffle his cabinet, resign, or
face a special session of parliament in which he could be impeached.42
This was extraordinary criticism from an institution that had basically
served as Suharto’s rubber stamp for thirty years. The military still
seemed squarely behind the president at this point. On May 20 all fourteen
economic ministers resigned under pressure from Akbar Tanjung and
Ginandjar Kartasasmita (lead economic ministers).43 Suharto sent his
vice president to convince the ministers to rescind their resignations;
instead, Habibie asked them to give him their support. House Speaker
Harmoko threatened to go ahead with impeachment proceedings.
Finally, on May 20, the military signaled that it too had lost faith in
Suharto. General Wiranto met the president on May 20 and told him
that he could not guarantee security in Jakarta; although there were
seventeen thousand troops in the city, the general did not feel that they
would be able to keep the peace when faced with further demonstrations.
Although none of his close allies were able to directly tell Suharto to step
down, many well-respected Islamic figures had spoken publicly about
Introduction ● 17

replacing the president, and other leaders close to him hinted at their
shifting views. Suharto resigned on May 21, 1998, after thirty-two years
in office.44
There is no question that the demonstrations, sparked by the
economic crisis and the perception that the IMF’s conditions were
implemented in a way so as to protect Suharto’s allies while the rest of
the country was suffering, contributed to Suharto’s abandonment by his
closest advisors and ultimately by the military. However, it was not
simply that democratization evolved because of demands from below.
Only when Suharto lost internal elite support did he agree to step down,
paving the way for elections to be held a year after.
By the close of 1999 it seemed that Indonesia had made a giant step
toward democracy. However, there are a number of lingering (and difficult)
problems that will make further consolidation of democracy more
challenging. Although he assumed office with high praise from the inter-
national community, Gus Dur quickly became viewed as a messy,
ineffective leader. He fired cabinet ministers without consultation and
refused to account for his actions.45 Accused of corruption and incom-
petence, Wahid was removed from office in July 2001. Megawati
Sukarnoputri took over and ruled until she lost the September 2004
election. Although Megawati’s party, PDI-P, had the largest number of
seats in parliament and she was widely popular in some circles, her cabinet
continued to reward supporters and conservative forces over reform-
minded leaders. Increased separatist tensions and conflict over how
to react to militant Islamic groups made Megawati look weak and unable
to balance diverse and sometimes conflicting interests.46 In parliamen-
tary and then presidential elections held in 2004, Megawati’s PDI-P lost
seats in the legislature, and she lost the presidency to former general
Susilo Bambang Yudhoyono, a newcomer to electoral politics. Indonesia
has made enormous strides in implementing and consolidating democracy.
The institutions and mechanisms are now mostly in place for Indonesian
citizens to truly have a say in local and national government and policy
making. Where I question the fullness of democratic promise is in the
protection of rights and the willingness and ability of the regime to
address problems of corruption. Indonesia faces pressures from militant
or radical groups, some seeking independence from Indonesia, some
seeking to implement an Islamic state. In part because of these pressures,
the Indonesian military and police still have a great deal of (unofficial)
power. In a number of places (such as Papua, Aceh, and Ambon) atroci-
ties have been committed both by state forces and by militant groups. In
addition, the government has not acted forcefully enough to protect
18 ● Political Change and Consolidation

some communities’ safety and security. As long as violence is allowed to


happen to unpopular groups, for example, against Christians, the ethnic
Chinese, or small religious sects, the ideal of democracy will not be
reached or fully consolidated.

Thailand
Thailand had the dubious distinction of being the first domino to be hit
by the financial crisis. The currency crisis hit in July 1997 and called
into question years of economic growth and increasing prosperity. It
triggered large demonstrations and protests against Prime Minister
Chavalit’s government for being unable to cope with the problems and
for seeming incapable of making any decision to stop the free fall of the
economy. People rallied around proposed changes for a new constitution,
and, ultimately, opposition politicians, some within the dominant coali-
tion in power, plus key factions within the military and even the king
threw their weight behind the charter. Finally, Chavalit and entrenched
politicians were forced to adopt the new constitution that aimed at
reforming the political system, and at making corruption and vote buy-
ing less prevalent. Finally, late in 1997, Chavalit resigned, paving the
way for the opposition to come to power and to leave the field more
open for elections in the following year.
While the chapter on Thailand will show that the economic turmoil
was a prime catalyst for political change, it was not as simple as saying
that public outcry over the economic crisis forced conservative parlia-
mentarians into voting to accept the proposed constitution. While pub-
lic outcry did matter, what is vitally important is that elite political
leaders, the heads of the major parties, ministers, and military generals,
were renegotiating their alliances and ties both with one another and
with various groups in society that were pushing for change. Elite
resignation to political pressure and policy shifts among the top leaders
is what ultimately allowed for the passage of the constitution and for
Prime Minister Chavalit’s departure. The 1997 constitution was hailed
by reformers and analysts for attempting to bring significant political
reforms to a system that was partially democratic but had been corrupted
by vote buying, money politics, and well-entrenched political elites who
seemed less-than-responsive to people’s needs. Ultimately, I argue that
the consolidation of democracy was in reach in 1997 and in the aftermath
of the economic crisis, but under Thaksin democracy slipped further
from Thai citizens’ grasp. The explanation or the independent variables
for both the successful reforms of the political system in 1997 and the
Introduction ● 19

backsliding away from democratization are largely the same. When


conditions or variables change and when elite priorities or preferences
shift, we can see the results in Thai politics. When both internal and
external pressures prod democracy along, reforms take place. When
pressures push in different directions, democratic reforms become
threatened. Internal pressures include the military, civil society, and the
behavior and power of political and economic elites; and external ones
are the IMF, national security concerns, and globalization in general.
The year 1997 may have been a unique moment: segments of the
military, groups in civil society, some elites in power, a number of busi-
ness leaders, as well as the IMF and international investors, all shared
common concerns about the Thai political system and saw the passage of
the new constitution as beneficial. It is almost impossible to envision a
repeat of this kind of broad consensus about politics or about the need
for reform occurring today.

South Korea
In the fall of 1997 South Korea was in the midst of a hotly contested
presidential election. The then president Kim Young Sam was prevented
by term limits from running again; hence, the race was essentially
between longtime political dissident Kim Dae Jung and the GNP
(Grand National Party) candidate Lee Hoi Chang. Kim Dae Jung’s
victory in December was heralded as the first true democratic transfer of
power in South Korea and the economic crisis was credited for giving
people incentive to vote out the incumbent party.
As the Asian financial crisis hit one Southeast Asian nation after
another, South Korea seemed as if it would be immune to similar ills. An
article in the Christian Science Monitor describes how the students in
South Korea were less and less likely to mount large protests.47
There were fewer and fewer students joining political organizations on
campus, and the number of radical student activists had fallen signifi-
cantly. By 1997 Political apathy seemed more the norm than political
engagement.48
In the fall of 1997 Kim Young Sam and his party promised a reform
package to help clean up debt-ridden banks. Thousands of Central Bank
employees threatened to go on strike because the proposal would
strengthen the power of the Ministry of Finance (MOF) by giving them
supervisory authority over local banks.49 There did not seem to be a
larger public discussion about weaknesses in the economy and threats to
economic stability. Activism came largely from workers of Kia Motors
20 ● Political Change and Consolidation

who went on strike repeatedly in October to protest the government’s


decision to turn the firm into a state-controlled company through
receivership.50
The banking sector had already been severely stressed by continued
lending to struggling firms, when in late October Hong Kong was beset
by problems. As pressure was put on the Hong Kong dollar, financial
authorities were forced to push up interest rates to defend the peg to the
(U.S.) dollar. This resulted in a severe sell-off in the Hong Kong stock
market. South Korea could not avoid the effects due to Hong Kong’s
problems. Korean companies and banks faced liquidity problems and
foreign banks refused to roll over short-term foreign credits to Korean
financial institutions; on November 21, 1997, Korea was forced to give
up supporting the won. On December 3 South Korea agreed to a huge
IMF program of US$57 billion (with additional resources from
the World Bank, the Asian Development Bank, and other countries in
the region). The package proved insufficient and at the end of December
a new program was announced with additional resources and new con-
ditions and terms with foreign banks to restructure short-term debt.51
On December 13, 1997, South Korean students and workers held a
rally to protest against the IMF agreement. They carried signs and
chanted slogans such as “Arrest Kim Young Sam for ruining the econ-
omy” and “Because the government and rich chaebol owners ruined the
economy, workers will suffer the pain.”52 After Kim Dae Jung won the
election a few days later, commentators and the media generally credited
the economic crisis for his victory. While there is no doubt that the
financial turmoil and uncertainty impacted the election results, it is too
simplistic to say that the opposition party only won the presidency
because the crisis caused people to vote the incumbent party out of
office. There were many reasons for South Korean voters to be displeased
with Kim Young Sam and Lee Hoi Chang’s party.
Resentment toward Kim Young Sam dates back to 1987. Roh Tae
Woo, the handpicked successor to authoritarian leader Chun Doo
Hwan, won that election largely because the opposition was divided
when Kim Young Sam split from his cooperation with Kim Dae Jung.
Kim Young Sam formed the Reunification Democratic Party (RDP) but
with opposition forces in two camps, the RDP was not strong enough to
wrest power from Roh. When Kim Young Sam won the elections in
1992, some Koreans viewed him as a sellout. In the run up to that election
Kim had joined Roh Tae Woo’s DJP. Those who had worked or hoped for
democracy in South Korea saw this party switch as a legitimation of an
old order they wish to see changed. Kim took office in 1992/93 promising
Introduction ● 21

political and economic reforms. To this end he did initiate several high
profile anticorruption campaigns and both former presidents Chun and
Roh were brought to trial and convicted for corruption (their sentences
were later commuted). However, throughout his administration, new
scandals arose about personal connections and favoritism. So, at the out-
set of the 1997 election people were disenchanted with Kim Young Sam’s
success. Party politics in South Korea are largely based on the personal-
ity and power of the party’s leader, as well as his regional affiliation.53
With Kim Young Sam’s reputation diminished even before the economic
crisis of October 1997, it was going to be a tight race in the presidential
contest.
In addition to Kim’s tarnished image, Lee Hoi Chang faced his own
scandals. Lee was hurt by accusations that his son had avoided military
service, and after a bruising primary Lee’s party challenger, Rhee In Je,
broke off from the GNP and ran again against him in the final election.
Even without competition from Kim Dae Jung, voters had many concerns
about Lee’s candidacy. As the election neared, all candidates promised to
uphold the agreement with the IMF. This was a somewhat surprising
move on Kim Dae Jung’s part. Kim’s core support had always come from
the left, from labor unions, and from his home region of Cholla.
Initially, Kim had criticized the IMF agreement and his remarks implied
that if he won election he would renegotiate the deal. This statement
caused dismay in the financial community both within South Korea and
internationally. Kim was forced to moderate his remarks and then he
chose to agree with the other candidates in a rare show of public agree-
ment among the contenders.54 One other significant move that Kim
made as the elections neared was that he announced a coalition with the
conservative politician Kim Jong Pil and his United Liberal Democrats
(ULD). Kim Dae Jung announced that he would appoint Kim Jong Pil
as prime minister if elected. This pulled some conservative voters away
from Lee Hoi Chang and the GNP. This political alliance and the
competition from several challengers may have decided the outcome:
Kim’s margin of victory against Lee Hoi Chang was miniscule (40.3 vs.
38.7 percent).55
Subsequent legislative elections in 2000 resulted in the ruling
Millennium Democratic Party (MDP; Kim Dae Jung’s renamed party)
failing to secure a majority; it won only 35.9 percent of the votes. Now
they were a ruling minority party and the GNP won 39 percent of
votes.56 Politics became a struggle between the ruling and opposition
parties without progress on institutionalizing political processes. Kim
faced accusations of corruption and influence peddling. In the run up to
22 ● Political Change and Consolidation

the 2002 presidential election, Kim resigned as MDP’s party president so


as not to tarnish its contender.57 The first presidential primary was held
within the MDP; citizens participated in choosing Roh Moo Hyun as
the candidate to run against Lee Hoi Chang.58 When a heated contest
arose between Roh and a close rival Chung Mong Jun, the two politi-
cians agreed to hold a debate and to poll public opinion about the victor.
Whoever scored higher would run as the unified candidate. Roh won
with 46.8 percent of support.59 He then went on to beat Lee in the
December 2002 elections. Roh represents a new generation of leaders.
He comes from a family of modest means and was outside the main
political establishment. The process by which Roh was selected to contest
the election was more open to popular input then ever before. With two
strong candidates, the hope was that the presidential election would be
decided based on policy differences. While this may have been truer than
earlier in South Korea, there is no doubt that regional allegiances still
mattered and mud slinging and shady deals were still present.60 Even in
the most recent elections in 2004, corruption was a huge issue and it is
clear that the power of the chaebol is weaker but not gone from the
political process. Democracy has been consolidated, and the system is
better than it use to be, but it is still imperfect.

Malaysia
Like Indonesia and South Korea, Malaysia faced an economic crisis in
1997/98. However, instead of turning to the IMF for help, Malaysia
decided to address its financial difficulties without international assis-
tance. Mahathir’s regime in Malaysia, like Kim Young Sam’s, Chavalit’s,
and Suharto’s, faced large protest movements and internal dissent among
political elites. Mahathir alone of these four leaders was able to hang on
to power and in the fall of 1999 his party’s coalition again won a large
majority in parliament. He left office voluntarily in the fall of 2003,
turning power over to Abdullah Badawi. How might we explain the lack
of political change in Malaysia when so many of the independent vari-
ables there were similar to the conditions in Indonesia, Thailand, and
South Korea? I believe that it is because Mahathir was able to outma-
neuver more reform-minded leaders (both in the economic and political
senses) within the government. He was able to do this in part because the
IMF did not require Malaysia to make changes to its political economy.
Thus, there was no external incentive or backing for possible challengers
to Mahathir’s power, and UMNO’s leadership was able to protect economic
elites with close ties to the party.
Introduction ● 23

Like neighboring countries, Malaysia too faced currency devaluations


during the summer of 1997. The ringgit fell precipitously and the central
bank tried to prop it up. Whereas Thailand, Indonesia, and South Korea
opted for a bailout package from the IMF, Mahathir blamed currency
traders and foreign financial forces for Malaysia’s economic ills. While
the prime minister denounced the likes of George Soros and other fund
managers, his deputy prime minister Anwar Ibrahim was the one who
quietly reassured investors that Malaysia would not invoke some of the
proposed (by Mahathir) restrictions on currency trading. There were
many rumors that Anwar and Mahathir were not getting along and that
one would have to triumph over the other. In October of 1997 Mahathir
returned from a trip to Latin America and at a press conference the
following exchange occurred:

Mahathir: “The press is asking questions. I’m answering and


tomorrow the currency traders will try and push
down the ringgit just because Dr. Mahathir
opened his mouth.”
Anwar’s laughing reply: “Then I will clarify and they will say we’re
quarrelling.”61

In December of 1997 Anwar seemed to be in full control of economic


policy, at Mahathir’s request. On December 5, the deputy prime minister
announced a series of austerity measures. This was viewed by many as a
rebuke of, or at least an end to, the aggressive spending that Mahathir
had led for over ten years. Over the next few months Mahathir because
more assertive about saving large, high-profile companies such as
Malaysia Airlines. On June 24, 1998, Daim Zainuddin was appointed
special functions minister and given the task of overseeing economic policy.
Daim had been minister of finance from 1984 to 1991, and was seen as
an ally of Prime Minister Mahathir. Most political analysts believed that
Diam would also serve as a check on Anwar’s power. On September 1,
1998, Mahathir announced that the country was imposing capital
controls, the currency was fixed at 3.80 ringgit to the U.S. dollar. The
next day Anwar was fired from his posts as deputy prime minister and
minister of finance. Later he was expelled from UMNO and arrested on
(bogus) charges of corruption and sodomy.62 His ouster triggered
demonstrations and calls for political reform.

Malaysians are perfecting a new form of protest: the “shop-and-shout”


technique. For the second Saturday in a row, a crowd of what looked like
ordinary shoppers on October 17 transformed a main street in central
24 ● Political Change and Consolidation

Kuala Lumpur into a massive demonstration calling for Prime Minister


Mahathir Mohamad to resign. As police looked on, several thousand people,
mostly Malays and some Indians, pumped the air with their firsts and
chanted slogans calling for the abolition of the Internal Security Act and
demanding justice for former Deputy Prime Minister Anwar Ibrahim.63

Protests continued throughout the fall of 1998 when Anwar’s trial


began. The police used harsh tactics to break up demonstrations; both
water canons and tear gas were used. Although there seemed to be a huge
outpouring of support for Anwar, and young people claimed to be politi-
cized as never before, Mahathir’s power never really seemed threatened.
Even the creation of a new political party, the National Justice Party, led
by Anwar’s wife Wan Azizah Wan Ismail, did not pose a significant
challenge to the ruling apparatus. Mahathir called for elections in
November of 1999 and although the Islamic opposition party (PAS) did
increase its number of seats at the state and national levels, the ruling
coalition (BN, the Barisan National) was again able to maintain its hold
over 60 percent of the seats in parliament.64
By not going to the IMF, Malaysia did not have to implement structural
reforms to their economy and cozy relations were maintained between the
BN coalition elites and business leaders. Also, more liberal (economically
speaking) forces in the government (most prominently Anwar) were left
without external incentives for others to make changes in the political
economy. Wan Azizah’s National Justice Party and the long-standing oppo-
sition party, the Democratic Action Party (DAP), were unable to capitalize
on the new mood of discontent in Malaysia for several reasons:

1. The political system, particularly the electoral system, is highly


gerrymandered in favor of the ruling coalition.
2. Chinese (who equal somewhat less than 30 percent of the popula-
tion) became more firmly supportive of the BN parties. In light of
the violence in Indonesia, Chinese Malaysians seemed to feel that
stability would be best maintained by the current regime.
Additionally, many Chinese are among the economic elite. For
them it was essential to nurture ties to politically powerful Malays,
hence their support for the ruling coalition.
3. Many of the newly politicized young people were kept off the
voting rolls by lengthy and cumbersome voter registration
requirements.

Ultimately, Mahathir was able to promote those who supported his


policy preferences and to push aside the most legitimate threats to his
Introduction ● 25

position. Popular protests did not translate into political change because
the opposition parties were highly diverse in their constituent appeals
and inconsistent in their messages and because Malaysian political insti-
tutions make it significantly cumbersome to unseat the current elites.
Likewise, Mahathir was able to avoid going to the IMF and so Malaysia
was not forced to restructure the close ties between business and political
elites. Finally, Malaysian Chinese supported the ruling coalition in
unprecedented numbers.
The economic crisis shed light on the undemocratic nature of
UMNO and the powerful ruling elite. For a brief period it seemed that
opposition politics might take off in Malaysia. However, by the end of
2001, Mahathir had consolidated power and reclaimed lost constituen-
cies. Anti-Islamic feelings helped BN win by-elections and infighting
among opposition parties (whose coalition was named the Barisan
Alternatif, BA), along with hostile government action against Keadilan
leaders who were members of PAS, contributed to the withering of a
forceful opposition to the ruling coalition.65 With levels of support
high, Mahathir announced he would retire at the end of October 2003.
His successor, Abdullah Ahmad Badawi, took over as prime minister on
October 31, 2003. “There is almost no chance that the BN, dominated
by the UMNO will lose power to the BA whenever the elections are
called.”66

Conclusion
As explained in the beginning of the introduction, there are several
reasons one can account for the different political outcomes in Asia
despite (roughly) similar economic woes in 1997/98. The case studies
highlight the importance of political relations at the highest levels of
power. Those leaders who were able to link support from some key
element of society to the country’s economic predicament were best able
to win or hold power. Hence, Kim Dae Jung endorsed the IMF’s plan
and made an alliance with the more conservative Kim Jong Pil. In this
manner he did not alienate too large a section of the middle and business
classes. Because of historical ties to labor activists and support for more
left-wing causes, he appealed to a wide variety of voters. Since the elections
were already scheduled and since South Korea already had fairly open
and free elections, it was easier for a political opponent such as Kim Dae
Jung to challenge the incumbent government. Thailand too already had
the infrastructure for greater democratization to happen peacefully. An
institutional mechanism existed to adopt a new charter and to hold new
elections when the prime minister finally stepped down.
26 ● Political Change and Consolidation

This is unlike the situation in Malaysia and Indonesia where opposition


parties were either too narrow in their appeal (Malaysia) or emasculated
(Indonesia under Suharto). Likewise, protestors in South Korea were
able to look to Kim as a credible alternative to the ruling party, and in
Thailand there were also political alternatives to the ruling party. In
1998 in Indonesia, there was no opposition leader that protestors could
look to for advocacy or power. Thus, toppling the regime was, in part,
the only option. As for Malaysia, as popular a figure as Anwar was in
1999, he was in jail and his wife was unable to coordinate a large enough
effort to challenge the system.
IMF prescriptions limited the maneuverability of Suharto, Chavalit,
and Kim Young Sam and opposition forces were able to capitalize on this
weakness. The IMF programs empowered more “liberal” leaders in
Indonesia, thus increasing the number of top leaders who gradually
withdrew their support from Suharto. Without IMF involvement in
Malaysia, Mahathir was able to discredit and push Anwar aside.
Popular protests seemed effective in Indonesia, Thailand, and South
Korea, but not in Malaysia. This is due in part to the size and intensity
of the protests (particularly in Indonesia) but also because of who the
protestors were and who supported them. In Indonesia the army was
ultimately unwilling to ensure order. In South Korea students and labor
groups were well-organized and had already established links to Kim Dae
Jung. Neither of these elements was true in Malaysia.
In the window of time from 1999 to 2006 how well has political
liberalization taken hold? Democracy seems robust but incomplete in
Indonesia, consolidated but not yet institutionalized in South Korea, less
liberal today than in 1997 in Thailand, and lacking in Malaysia. External
pressure (the IMF and global markets) once focused on the economy and
made demands on the political system for greater transparency and
accountability. These requirements were conducive to both encouraging
international investors to return to the region, and in empowering
reform-minded opposition forces. The current concern of external forces
(namely the United States) is security issues. The United States is
putting pressure on Indonesia, Malaysia, and Thailand to crack down on
militant Islamic groups and would like South Korea’s help in confronting
the nuclear threat from North Korea. Unlike during the economic crisis,
security pressures may play more into the hands of less democratically
minded actors. Political liberalization may be sacrificed for greater
national security but this does not have to be the case. South Korea has
shown that there are multiple ways to deal with a significant security
threat. In the last three presidential races “dovish” candidates have won
Introduction ● 27

out over “hawkish” ones. And, these candidates have also been the ones
campaigning for greater political reform and openness. This confluence
of factors does not seem present either in Malaysia or in Indonesia.
Security threats or potential ones seem more likely to provide justification
for increasing the power of the ruling elites and/or internal security
forces perhaps at the expense of greater democracy.
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CHAPTER 1

Thailand: Successful or
Incomplete Democracy?

Thai Political History


Scholars and journalists like to point to Thailand as the country in
Southeast Asia with the longest experience of independent and democratic
rule. Yet, Thailand’s political history can be better characterized as shifting
between different periods of time when power is concentrated (more or
less) in the hands of one of these groups: Bangkok bureaucrats, the
military, local officials, and/or the king. Thailand has had the benefit of
a long period of nationhood and under the absolute rule of King
Chulalongkorn (1868–1910) nationalism was developed based on the
importance of the king, Buddhism, and the bureaucracy. These were the
three elements that legitimized state power. In 1932/33 a coup was car-
ried out as a reaction to aristocratic privilege. Power shifted toward the
military and the bureaucratic elites. Although the coup was carried out
in the name of the people, power was still held by a cozy circle of
bureaucrats and military leaders. The aim of the coup was to weaken the
power of the conservative ministers of the royal government and it was
not against the king personally. With time, the king’s official power over the
bureaucracy and the military has diminished, but he has remained a pow-
erful personal figure and can command considerable behind-the-scenes
influence on important issues.
Three people would become the most powerful players in Thai politics
for decades to come: Pridi Panomyong, a law professor, Phibun (Luang
Plaek Phibunsongkhram), a junior army officer, and Phahon (Phraya
Phahonphyuhasena), a senior army officer.1 Factions quickly developed
around Pridi (leader of the civilian, left-leaning group) and Phibun
30 ● Political Change and Consolidation

(leader of a rightist, pro-military wing). After the 1932 coup, King


Prajadhipok’s relations with the new leaders gradually worsened. In
March 1935 he abdicated the throne. His ten-year-old nephew, Ananda
Mahidol (Rama VIII), was named his successor. In school in Switzerland,
the young king would not ascend to the throne until 1945. By the late
1930s the country had evolved into a weak fascist or militaristic state
under Pridi and Phibun’s rule. Phibun actively promoted nationalism
and sided with the Japanese during World War II. A significant under-
ground opposition existed and Pridi was part of it. This network worked
with U.S. intelligence throughout the war. Through the 1940s public
support for Phibun waned and the Japanese presence began to feel more
like occupation than an alliance. In June 1944 Phibun was forced from
office. A civilian government took over and Pridi again became a key
actor.
Elections were held in 1946 and were contested by political parties
for the first time in Thai political history. Two coalition parties, Pridi’s
Constitutional Front and the Cooperation Party, won a majority in the
lower house. A new constitution was promulgated that same year;
however, Thailand was entering a violent period where royalists and
militarists vied for power and there was conflict over the growing power
of socialist and communist forces. Pridi moved toward supporting the
anticolonial forces of the left and when the young king Ananda Mahidol
was mysteriously shot, Pridi was called a murderer and forced from
power. On November 8, 1947, an anti-Pridi coup overthrew the govern-
ment and Phibun and his allies took the reins of power. All opposition
was crushed.2 In 1947 Phibun and two retired generals carried out a
coup against the civilian government. Electoral results in 1948 supported
Phibun but he had trouble consolidating power. Many anti-Phibun (and
pro-Pridi) groups existed in the Army and in the Navy. In November
1951 there was a “government-engineered” coup. King Bhumibol returned
to Thailand, a revised constitution was passed, and elections were
held for half of a unicameral legislature; the other half was appointed
and most were army officers.
Phibun retained power and ruled with two powerful military officers,
Phao and Sarit. This was a period of intense anticommunist sentiment
and there was a great deal of violence and persecution against the
Chinese community in Thailand. Although many Chinese had been
living in Thailand for generations, the community was perceived to be a
“fifth column” working to spread communism wherever they lived.
While some Chinese were supportive and/or members of the
Communist Party, many were not. Regardless, all Chinese were seen as
Thailand ● 31

suspect during this period. Thailand also formed a close alliance with the
United States. The elections in 1957 were a brief experiment with
democracy. After the elections, students took to the streets and protested
heavy-handed government tactics such as ballot box stuffing. Sarit too
was critical of the Phibun and Phao factions of the government. Phibun
declared a state of emergency and scrapped democracy. In March of
1957 Sarit, head of the military, carried out a coup, suspended the
constitution, and dissolved parliament. The king backed his actions.
Although a civilian government was briefly put in power, Sarit took
control of the government in 1958 and instituted a military dictatorship.
From its relationship with the United States, Thailand received
money, weapons, and even had U.S. troops stationed there. Although
Sarit died in 1963, his policies and regime structure continued through
the 1960s. In November 1971 Prime Minster Thanom carried out a
coup against his own government, ending a short experiment with
parliamentary democracy. Military rule again prevailed. In response to
Thanom’s proposal for a fully appointed legislative assembly, students
and workers took to the streets. On October 13, 1971, more than two
hundred and fifty thousand people rallied in Bangkok; it was the biggest
demonstration in Thai history. The next day troops fired on the protes-
tors and killed seventy-five people. They also took over Thammasat
University. King Bhumibol stepped in to the quell the violence and
convinced Thanom to retain control of the armed forces but to turn over
the prime ministership to a civilian, Sanya Dharmasakti. Later Thanom
and his close allies fled the country.
Although there was a return to civilian control and new elections were
held, a significant number of politicians were right-wingers and they
seemed more inclined toward status quo than toward meaningful
reform. Through the 1970s, the government acted violently against
communist insurgents and against any progressive leftist groups. Tension
and violence mounted and in August 1975 police (on strike to show the
government their displeasure at perceived weakness toward student
activism) went on a murderous tirade at Thammasat University.
Increasing the power and the coerciveness of the police and the military,
several ultranationalist (quasi-military) groups were formed to harass
leftist and social activist groups both within Bangkok and in the coun-
tryside. The brutal confrontation between leftist and rightist groups
reached an apex in October 1976. Police again lay siege to Thammasat
University where two thousand students were holding a sit-in. The next
day’s assault on the campus resulted in hundreds of students being killed
or wounded and more than one thousand being arrested. That night the
32 ● Political Change and Consolidation

military took control of the government and instituted a fairly repressive


regime. Under the prime ministership of Thanin Kraivichien, strict cen-
sorship was enforced, unions were watched and tightly controlled, stu-
dent leaders and other activists were driven underground and into
remote regions.
There was a slight thaw in the extreme measures of the mid-1970s but
the military remained the center of power. In March of 1980, General
Prem Tinsulanonda became prime minister with the support of young
officers and civilian political leaders. He survived a coup attempt in
1981 with the pivotal support of the monarchy and some units of the
army. In the 1983 elections Prem was able to hold on to power by keeping
his military backing and by portraying himself as a statesmen above
petty party politics. In the 1980s there was an increase in the number of
parties contesting for assembly seats but the parties did not have strong
organizations or ideological roots. Switching parties was (and still is)
common among politicians. In the 1988 election Prem was forced to
step aside and the Chart Thai Party formed the government with
Chatichai as the prime minister. Along with the winding down of the
Cold War and the shrinkage of military budgets, the military faced pres-
sure to assert less political control. In their place, bureaucrats became
more powerful.
Divisions within the military resulted in another coup in 1991.
Conservative generals seized power amid accusations of corruption
against the previous regime and they appointed a government led by
business elites. Anand Panyarachun, who had served in the Foreign
Service for twenty-three years, then moved on to become prominent in
the business community, was chosen prime minister and his ideas on
economic liberalization pleased potential opposition in the financial sec-
tor. Initially it seemed that the business community would be quiescent
and the number of politically active groups and individuals was small
enough not to pose any risk. The military began drafting a new consti-
tution that would preserve its power by allowing it to appoint members
of the senate and the prime minister. Newspapers began attacking the
military for their blatant political manipulations and students, labor,
and democracy activists finally saw mass support growing behind their
efforts. The final spark came when General Suchinda Kraprayoon, a key
actor in the 1991 coup, was chosen as prime minister after elections were
held in March 19923 under the (military-designed) 15th Constitution.4
By May 1992 there was a massive outpouring of popular discontent and
the military was forced out of power. Although the uprising was successful
in ousting the military, it was not without cost. Many unarmed protestors
Thailand ● 33

were shot by the army as the generals tried to cling to power. The killing
of scores of democracy activists became known as “Black May.”5 Many of
the leaders of the 1991/92 protests became the founders of a strong,
multifaceted nongovernmental organization (NGO) sector6 in Thailand,
which exists even today.

Principal Players in Thai Politics: The Military


In Thailand from the 1930s until today there have been four significant
actors in the political process: the military, private business, the king,
and civil society. Over time the power of each of these groups has
changed significantly. While the military used to be the unquestioned
center of power, its role has shrunk to a more traditional military capacity
and since the economic crisis it has intervened less in political affairs.
The military’s legitimacy and power in politics stems from the 1930s and
the anticommunist struggles of the Cold War period. The military
embodied the anticommunist ideology of the Cold War and was on the
front line in defending Thailand against enemies both within and outside
of the nation’s borders. The military and police’s power also comes from
a monopoly on the use of weapons to enforce political order. In the
1960s and 1970s the military received considerable support, equipment,
and training from the United States (the United States maintained bases
in Thailand until 1976)7 and it used its strength to suppress leftist
groups and then others who opposed its role in politics. Simply, the mil-
itary had the coercive means to enforce its position and political prefer-
ences. In addition to these overt illustrations of power, the military’s
power also extended to control over many radio and television stations
and over several banking institutions. This gave the military more wide
reaching control over what information people received and the direction
of the economy. The military has often used its power to take direct con-
trol of the reins of government; Thailand suffered coups in 1947, 1976,
and 1991 and in some cases army generals appointed themselves to the
position of prime minister.
Historically, there have been problems with military rule in Thailand.
As early as the 1947 coup, significant rivalries and divisions existed
among the different branches of the military. On November 8, 1947, the
anti-Pridi coup overthrew the government and Phibun and his allies
came back into power, destroying all opposition. Internal fighting
between the army and the navy resulted in the complete emasculation of
the latter. This segued into a period of intense U.S. support for the army.
Vast sums of money were spent to create a huge, well-equipped army and
34 ● Political Change and Consolidation

police force (which was used against internal enemies far more than
against external ones). However, it did not take long for a political
rivalry to develop between the police and the army. On September 14,
1957, General Sarit’s army surrounded police headquarters and Phibun
and his closest allies were forced to flee the country. The army thus
became the most powerful institution in the country.8
General Sarit ruled until he died in 1963 and leadership was passed
on to his military subordinates. Sarit focused on economic development
and cozy relations developed between the military and business leaders.
As social protests increased in the 1970s the alliance between business
and military interests weakened. A communist insurgency gained
ground and preoccupied the military’s attention. In 1975/76 there was
increasing political activism. New political parties formed, and student
and peasant activism was on the rise. As the political debate moved left-
ward the military became concerned about its power and more assertive
of its conservative views. Politics was increasingly polarized. On October 6,
1976, a coalition of conservative forces gathered outside Thammasat
University and then attacked. One hundred students were killed and
thirteen hundred arrested. The army then carried out a coup and helped
bring to power a rightist military regime. Many of those who had some
association with a progressive or leftist cause were forced into the hills.9
Firmly in power again, the military suffered factionalism and jockeying
for control. Over time, its power diminished. More political parties
formed, but they lacked strong institutional or ideological roots. By the
end of the Cold War military spending had shrunk. In the 1988 general
elections General Prem was forced to step aside and the Chart Thai Party
formed a new government. Chatichai was chosen as prime minister.
While Chatichai tried to assert his own power, he was forced to placate
and work with General Chavalit, the head of the military. By 1991
General Chavalit was pushed aside by a different faction of the army, a
group called “Class 5,” who were more conservative and royalist.
Thailand’s transition to democratic rule in the late 1980s was highly
ambiguous. The military remained quite powerful even while there was
an expansion of electoral politics. The military exercised its influence
both through legally prescribed means, such as its seats in the assembly
and the appointed senate, and through extra-constitutional methods,
such as the coup attempt in 1991. Even though Thailand (by the end of
the 1980s) had few legal barriers to the formation of interest groups or
political parties, the continued political power of the military reduced
the level of democracy and the influence of elected representatives in
parliament.
Thailand ● 35

Popular Protests and Civil Society

There is a great deal of political science literature that tries to make sense
of processes of democratization. Some of these works find that popular
protests or demands from below are the primary independent variable in
bringing about democracy. For example, Ji Giles Ungpakorn in his article
on political reform in Thailand finds that Thailand’s democracy was
measurably impacted by mass protests and activism. He argues “(t)he
political freedom now exercised by Thai citizens is a direct result of the
continuous mass struggle against dictatorship.”10 Ungpakorn goes on to
discuss the nature of different forms of mass participation. Demands for
political change have come from various actors in Thailand. There are
active and influential NGOs and increasingly vocal groups of people
who stage protests and try to affect politics. Modern popular activism
dates to the revolution of 1932. While elite bureaucrats were at the fore-
front of demands for reforming the monarchy, there was also widespread
social discontent and peasants in the countryside became increasingly
critical of the regime as well. The October 1973 protests against the mil-
itary dictatorship continued this initial public outcry from the 1930s, as
students and thousands of workers rose against the ruling elite. Popular
protests become polarized between forces on the right and on the left.
On the left the Communist Party of Thailand worked with worker and
student organizations. Since this was the height of the Cold War, and
because the United States’ war in Vietnam had just ended, there was an
intense and vigorous reaction to politicization of the left. Several quasi-
militaristic organizations were created: the “Village Scouts” were group-
ings of middle-income peasants and rural small business people under
the leadership of the monarch. “Middle ranking government officials,
priests and intellectuals were urged to join a similar force known as the
‘Nawapon’ and unemployed and discontented technical college students
were organized into the ‘Red Gaurs.’ ”11 Leftist leaders were persecuted
and assassinated. The violence reached an apex on October 6, 1976,
when unarmed students and workers were shot and others brutalized at
Thammasat University. Later in the day, a military coup installed a
right-wing regime to power. Through the rest of the 1970s and 1980s
mass activism was stifled and economic growth was the highest priority.
While groups in society were less active during the late 1970s and in
the 1980s, it did not mean that consensus was easily reached. Within the
military and highest offices of power, there was disagreement about the
direction that Thai politics should take. By the late 1980s parliamentary
democracy was restored as more liberal military officers came to power.
36 ● Political Change and Consolidation

Leftist NGO leaders from the 1960s and 1970s had returned to Bangkok
and were increasingly at the forefront of a new effort at civil participation.
They created organizations to impact the political arena and to assert
their interests. Business elites also became more demanding of the
political system.
The cumulative effect of Thailand’s recent political history is that
civil society certainly exists and can have a significant impact on the
political sphere. This is particularly true when other key factors
are working toward the same aim. The military is very powerful and
well-connected to business and political elites. Members of the military
have acquired executive positions on boards of directors of major Thai
companies. Thai business executives have also become more politically
active as they use their wealth to contribute to political campaigns and
more frequently now to run for office themselves. Hence, business, mil-
itary, and political elites have increased their political power through
these economic relations.12 The king too is a center of power; although
he only uses his preeminent position occasionally, he is a potent and
forceful actor once his preferences are made clear. Most notably, King
Bhumipol intervened in the 1981 coup and in the 1992 violence. In the
latter case, the king met with General Suchinda Kraprayoon and the
Bangkok governor, the two major antagonists during Black May. He per-
suaded General Suchinda to step down and chose the well-respected
Anand Panyarachun to serve as prime minister. This defused the crisis
and returned the country to a semblance of democracy.13 As will be
discussed shortly, the king also expressed support for the 1997 constitu-
tion, which made opposition to it in parliament a far less likely option.
The last important legacy of Thai history is that external factors are
important forces in shaping the internal dynamics of the country. The
threat of communism during the Cold War had a significant effect on
internal politics, as did relations with the United States during that
period.14 Likewise, Thailand’s relationship with international investors
and the IMF shaped the nature of political reforms in 1997 and after.
The effects of the pressure from the IMF and global capital will be
discussed in forthcoming sections of this chapter.

The 1997 Economic Crisis and the Ratification of


the New Constitution
Economic Turmoil
After having enjoyed economic growth rates of more than 9 percent per
year between 1986 and 1996, Thailand faced a serious financial crisis in
Thailand ● 37

1997. Following years of real estate speculation, fears about government


corruption, and concerns about the value of the baht, currency traders
and international investors began to sell off their holdings in mid-1997.
On July 2, 1997, the Thai Finance Ministry and the Bank of Thailand
finally gave up trying to prop up the value of the baht and allowed the
currency to float. As feared, the baht took a steep plunge from 24.45 to
the U.S. dollar to 28. Five days earlier the government had tried to boost
investor confidence by suspending sixteen finance and securities companies
for a month but it seemed that nothing would halt the run on the baht
and the seemingly sudden decision of global investors to sell off Asian
currencies and to pull investment out of Asia.15 Prime Minister Chavalit
faced criticism at first for not reacting quickly to the looming crisis.
Once he did act and suspend shaky finance companies and float the
baht, he may have weakened his political base by “forcing his coalition
partners to agree to policies that hurt their narrow, personal interests.”16
Already in early July political turmoil was brewing. Finance Minister
Amnuay Virawan left before July 2, 1997, allowing Chavalit his first
opportunity to try and implement his preferred policies. Chavalit chose
Thanong Bidaya to serve as the next finance minister and he was imme-
diately seen as indecisive and not strong enough to take necessary action.
He did not approach the IMF until July 28 when he requested emergency
credit for the ailing economy. Also, on July 28, Rerngchai Marakanond,
the governor of the Bank of Thailand, resigned pleading fatigue from the
crisis.17 A month into the crisis and the Thai government seemed to have
no clear plan to cope with the mounting problems. Chavalit preferred to
hold off from taking an IMF loan and instead hoped that a standby
credit line of US$500 million would suffice to get the economy back on
track. The prime minster had to work with and negotiate agreement
with the six-party government in order to take any sort of action. Many
politicians were worried that the IMF loan would carry too high a polit-
ical price to stomach. The IMF would require austerity measures such as
cutting subsidies and spending, raising taxes, and carrying out privatiza-
tion of state-supported enterprises. Elected leaders from rural areas
would have to cope with angry farmers faced with losing agricultural
subsidies and tax increases. Any of these measures could lead to protests.
Workers would strike if privatization and shrinkage in state enterprises
were to take place.18 Despite these risks, it quickly became clear that
more decisive action would be needed if Thailand was to rebuild investor
confidence and stop the baht’s precipitous decline.
By the first week in August, the government made it clear that it
would have to turn to the IMF for help. Immediately, the government
shut down forty-two more finance companies and imposed higher duties
38 ● Political Change and Consolidation

on consumer goods. These measures were to bring Thailand into


compliance with IMF strictures and to convey a message to investors and
the Thai public that the government was tackling economic problems.
On August 14 Chavalit announced changes to his cabinet. Former
finance minister Virabongsa Ramangkura (who had worked with the
IMF before when Thailand devalued the baht in the 1980s) was
appointed a deputy prime minister as was prominent businessman
Thaksin Shinawatra; these appointments were meant to signal that
Chavalit was taking necessary steps to move to firmer economic ground
and to convince the IMF that Thailand would meet its criteria for
transparency and good governance to qualify for the bailout package. A
seemingly enormous bailout package was put together to assist Thailand:
US$16.7 billion in standby credit was pledged, about US$10 billion of
which came from Asia (Japan was the largest donor and China joined the
club of donor nations for the first time), the rest came from the IMF and
other smaller contributors from within Asia.19 Although the pledge of
funds came in August, it would be months before Thailand’s economy
really stabilized. As the financial crisis unfolded Thailand was also
enmeshed in political changes. One of the reasons that Prime Minister
Chavalit found it so difficult to make economic policy changes was that
he was trying to balance a wide array of political interests and to cope
with popular demands to ratify a new constitution that would effectively
mean the end of his tenure in office.
Despite ultimately ratifying the proposed new constitution, political
turmoil prevented coherent economic policy making and through the
fall of 1997 Thailand continued to take baby steps toward compliance
with the IMF, and even these steps were often discontinued if protests
ensued.

More than two months after being promised a $17 billion credit line by
the International Monetary Fund—Thailand has barely begun to formulate
the economic restructuring that is required for the recovery program . . .
So far the Government has raised the sales tax and made plans for spend-
ing cuts that will halt a number of projects like highways and rail lines
that are essential to further growth. But when it took the difficult step of
raising fuel taxes last week to meet a budget target demanded by the IMF,
it quickly rescinded it in the face of public resistance . . . The political
uncertainty has itself become one of Thailand’s foremost economic prob-
lems as investor confidence slips lower and foreign lenders close off their
credit lines.20
Thailand ● 39

After reshuffling his cabinet once again in October, and finding


little economic reward, Chavalit made a surprise announcement on
November 3, 1997. He stated that he would resign in three days’ time.
The baht strengthened and the stock market posted its largest gains that
fall. When the Democratic Party assumed leadership it promised coherent
economic policy making and decisive action to get the financial mess
cleaned up.

Political Chaos
The economic crisis coincided with the final stages of the drafting of a
new Thai constitution that hoped to reform the political system to end
(or at least weaken the effects of ) vote buying, corruption, and intense
patronage networks. In the wake of the events of Bloody May 1992,
demands for political reforms did not end with the return to electoral
democracy. A substantive process of political reform began shortly after
1992 with Amon Chanthrasombun’s study on reforming Thai universities
and the bureaucracy. Amon published newspaper essays and pamphlets
on political reform and his work was widely circulated when his ideas
were published as Constitutionalism: The Way Out for Thailand. From his
position as a public intellectual at the Institute for Public Policy Studies
(IPPS), Amon laid out what would become the foundation of a new
framework for political institutions and power structures in Thailand.21
Parliament seemed incapable of leading the way in making changes to
the political system and so much of the initiative for reform came from
civil society. NGOs such as IPPS and committees such as the Democracy
Development Committee (DDC) played a lead role in crafting a pro-
posal for a new constitution.22 Support for political reform in 1994 came
from elites and from NGOs and leading intellectuals and they pushed
for Prime Minster Chuan to take up the proposed ideas. Chuan’s
government fell in 1995 because of a corruption scandal over land deals
and the Chart Thai Party got to form the next government. Prime
Minister Banharn’s government announced support for the DDC report
but his government fell in November 1996 because of corruption and
incompetence.23 A decision was made to create a Constitutional Drafting
Assembly (CDA) comprised of bureaucrats, professionals (academics and
others), former politicians, and NGO leaders. A huge lobbying effort took
place to push particular candidates for the CDA. There seemed to be
massive public support for political reform. Retired general Chavalit
40 ● Political Change and Consolidation

Yongchaiyut became head of the new governing coalition in 1996 and


that year’s election was widely viewed as hugely corrupted by vote buy-
ing. Chavalit professed support for political reform and announced that
new elections would be held once a new constitution was adopted. One
can assume that he hoped conservative politicians in parliament would
prevent this from becoming a reality too soon.
When the economic crisis hit, the parliament was scheduled to vote
on the proposed charter in mid-September.24 As the economy unraveled
in mid-July, the CDA agreed on two very controversial clauses to add to
the document. In an attempt to improve democracy and end vote buying,
the CDA clauses required ministers of Parliament to give up their seats if
chosen for the cabinet, and they proposed direct election of senators (at
the time members of the senate were nominated by the prime minister).
When these ideas were suggested, some political analysts saw the
proposals as a stall tactic for supporters of the ruling coalition. The ideas
were so radical that parliament would surely have to reject the whole
document, thus leading to a national referendum on the issue. This
would prolong Chavalit’s rule. However, it would have been quite risky
for coalition members to vote against the reform charter.

One leading CDA member, who did not want to be named, believes
parliament will endorse the new charter. “I think that Chavalit is clever
enough not to create more difficulties for himself because of the economic
problem,” he says. “If Chavalit and his New Aspiration Party refuse to
accept it, it might make the public angry, and businessmen in particular
might come out with others to oust Chavalit. There might be a crisis.”25

Still, heading into the vote in September, it was not at all clear that the
parliament would pass the charter and avoid the chaos of a national poll.
The opposition party, the Democrats, said that it would vote for the new
constitution despite some reservations. Many in the ruling coalition still
opposed it. Public support for change was mounting and politicians were
beginning to feel that they had little choice but to vote in favor of the
new charter. On August 18 two thousand people rallied in Bangkok to
support the draft and King Bhumibol Adulyadej fully favored its pas-
sage.26 While it seemed logical for the ruling coalition to support the
new charter or face being voted out by an angry public, in fact there was
a great deal of contention over what course of action to take.
In general the middle class supported political reform and the
Democratic Party, the opposition in parliament signaled its intended
support. However, conservative forces were not out of the picture in
Thailand ● 41

mid-September 1997. Under the leadership of Interior Minister Sanoh,


who controlled the administrative apparatus of the country and about
half the party’s members of parliament (MPs), stalwarts rallied opposi-
tion among rural leaders and conservative monarchists. Rural elites in
powerful local positions (village and provincial leaders) were threatened
by the new constitution’s provisions that they be elected rather than
appointed for life and thus were clearly against the proposal.27
It came right down to the wire. Ironically, military and business
leaders pressured Chavalit to accept the new constitution and after years
of political wrangling and last-minute attempts by opponents to extend
the constitutional debate (and to try to avoid a planned censure motion
against the government), the constitution passed parliament and was
ratified. Sanoh was forced to back down when the military pressured
Chavalit into public acceptance of the charter.28 Just prior to the vote in
parliament, Thailand’s army chief, General Chettha Tanajaro, stated that
the new constitution should be passed and he also expressed the opinion
that it should not be amended until after new elections could be held.
Although Chettha was speaking in his capacity as a senator, there is no
doubt that his double role as head of the army gave his view extraordi-
nary weight.29 On September 27, 1997, after a three-day censure debate
on Chavalit’s government, the Thai parliament voted 578 to 16 (with
17 legislators abstaining) in favor of the charter. The prime minster survived
a no-confidence vote (212 to 170) and his coalition partners agreed not
to abandon him in exchange for his promise to support the new consti-
tution.30 When the constitution was passed and Chavalit overcame the
vote of no confidence, it seemed like the worst of the political chaos and
the inability to make economic policy choices might be behind his
administration. But it was not so. By the third week in October, the
economy was no closer to a turnaround and a meeting with the IMF was
scheduled for early November to evaluate progress on mandated austerity
measures. On October 21, 1997, Prime Minster Chavalit contemplated
a cabinet reshuffle; protestors again called for his resignation. That
evening he called a meeting of top cabinet officials and security leaders
to discuss declaring a state of emergency. The top brass of the military
squashed the idea. General Chettha stated that “No leader with mental
stability would opt for this choice.”31 With the military taking this
option off of the table, Chavalit did succeed in forming a new cabinet,
but this was really a last-gasp measure. He finally gave in to pressure32
and resigned.
Given that Thailand had just adopted a new constitution, and that
the country had a history of nondemocratic transfers of power, it was not
42 ● Political Change and Consolidation

at all clear what would happen next. Chavalit’s coalition partners were
left scrambling to decide if they should stay together and try to pick a
new leader, or if they should defect and form a coalition with the next
largest party in parliament, the Democratic Party. Parliamentary
convention was that when a prime minister resigned, the second-largest
party (in this scenario the opposition Democratic Party) got a chance to
form a government. The new constitution allows for a nonelected
premier to govern until new elections can be called and the new charter
can be fully implemented. However, the idea of a nonelected premier
seemed to go against the ethos of the new charter. Finally, the issue was
decided when members of Chavalit’s government defected to the
Democratic Party and they were able to form a seven-party coalition and
take power. Chuan Leekpai became Thailand’s new prime minister in the
third week of November 1997.33

Explaining Political Change


Theoretical Discussion
There is a great deal of political science literature on both transitions to
democracy and on the consolidation of democratic reforms, some of
which was discussed in the introduction. Most scholars of Thai politics
agree that Thailand had become a (more or less) democratic state by
1988 when Chatichai Choonavan, leader of the Thai Nation Party,
assumed office as the country’s first democratically elected prime minister.
Democracy, however, did not stick. Chatichai’s term in office was ended
by a peaceful coup, however, later demonstrations in May of 1992 were
violently suppressed by the military. Elections held later that year
resulted in the successful transfer of power to the opposition Democratic
Party and it seemed that democracy was back on track. Despite the
return of electoral politics and the military’s retreat from sudden power
grabs, Thai politics has been plagued by corrupt practices such as vote
buying and cozy relations between political, military, and business leaders.
How might one explain the confluence of factors that came together in
1997 to implement political reform, and why have reforms not had the
desired effect of further democratization?
My explanation for why efforts at democratic consolidation have been
incomplete takes as its starting point much of the earlier scholarship on
transitions from authoritarian rule and work on the consolidation of
democracy. While there is little need to go into great depth detailing the
various arguments and methodologies that scholars use, it is worth a
Thailand ● 43

brief summary of the basic arguments about how and why transitions
occur. Huntington, Przeworski, Share and Mainwaring, and O’Donnell
and Schmitter34 all find that transitions occur in (roughly) one of the
three following ways:

1. Transformation: when elites in power bring about democracy.


2. Replacement: when opposition groups take the lead in bringing
about democracy and the authoritarian regime collapses or is over-
thrown.
3. Transplacement: joint action between government and opposition
groups.35

In each of these three routes to political change, there is negotiation


between hardliners (standpatters in Huntington’s phrasing) in the
government who do not want to see any reform go through, moderates
(liberals) who are willing to negotiate the outcome of the change, and
radical reformers (democratizers) who want to see more drastic and far-
reaching changes. Similarly, within opposition groups fighting for
change there are generally democratic moderates willing to compromise
with those already in power, and more radical extremists who want to see
the complete destruction of the old order. In any of the three ways that
a transition might occur there is negotiation and maneuvering among
the various groups. Huntington’s (and the other scholars’ as well)
description of how a transition will take place is largely elite-focused.
Large or mass protests are not viewed as the primary catalyst for
change.36 By the late 1980s Thailand might have been considered a
liberalized but not fully democratized country, but Huntington does not
include it in his typology of countries. My assessment would be to
categorize Thailand’s transition from military rule as an example of a
transformation.
This chapter takes as its starting point the fact that in 1997 Thailand
was a weak democracy. Elections were held often but they were neither
clean nor fair, civil society and some segments of the media were critical
of the government, but not entirely free from government control, and
the military was still a significant political player. The process of political
liberalization in the 1970s and again in the 1980s was mainly a result of
elite decisions; hence, a great deal of compromise had been enacted to
co-opt hardliners into allowing reforms to go forward. When further
reforms were on the table in late 1997, there were pockets of resistance
that had not yet been forced to cede the perks of their power. The
economic crisis was the last push to get acquiescence from stalwarts in
44 ● Political Change and Consolidation

power. Haggard and Kauffman’s work on the impact of economic


conditions on domestic politics points in an important direction: “crises
are neither necessary nor sufficient to account for authoritarian
withdrawal, poor economic performance reduces the bargaining power
of [authoritarian] incumbents and increases the strength of opposi-
tions.”37 They further explain: economic crises change the demands of
civil society or the private sector, the loyalty of the military, and expec-
tations of the larger population. With the military still a powerful force
in 1997, one could easily imagine the economic crisis as a justification
for a reversion to authoritarianism as this might have been a more
efficient way of enacting the “right” economic policies. Yet, almost the
opposite occurs; the military backs the passage of the new constitution
and conservative politicians with much at stake either decide to back the
charter or become a small enough minority not to be able to change the
outcome of the vote. The argument made here is that Thailand made a
big leap forward in the process of democratic reforms with the events of
1997 but that it has not really consolidated democracy. Before I go into
the empirical information to explain why the reforms went forward
when they did, and why they have stagnated, I would like to briefly
review key points about democratic consolidation.
One can say that democracy has been consolidated when there have
been several electoral cycles and that those elections have been deter-
mined to be largely free and fair. Also, democratic consolidation means
that elected and appointed officials agree to play by the rules of the
game. Lastly, I argue in this work that democracy must have an element
of fairness and accountability. Massive corruption and/or leaders who
are above the law, even if they are elected in free and fair elections, are
injurious to democracy.
In 1997 Thailand began the process of consolidating democracy, but
after an exciting series of changes, reforms have stalled. In thinking
about these different elements in the context of Thailand, it is possible
to wonder about their applicability. There may not have been a consoli-
dation of democracy in Thailand for two different reasons. First,
Thailand does not fit neatly in to any of Linz and Stepan’s categories of
what regimes might look like prior to democratization. Thailand’s polit-
ical system has long had elements of democracy and elements of military
authoritarianism. Because of this, perhaps, it is more accurate to ask why
one sees political liberalization or reform in 1997, not why there was
democratization in 1997 (because this implies that there was no democ-
racy prior to that point). If this is the case, then perhaps it is harder to
assess if democracy will last (or be consolidated). If democracy is a more
Thailand ● 45

fluid condition, then a little more openness, or a little less openness (or
accountability), may not be frightening or threatening to a majority of
Thai citizens. So, how might one explain successful political reform in
1997 and afterward, and also the stagnation of those reforms?
There are several explanations for the successful passage of the
constitution and the tangible political reform efforts of the mid-1990s.
I group the factors into internal and external elements. Internal factors
include political infighting/elite realignment, the military, and civil
society/popular protests. External pressure for political reform came
from the IMF and the demands of the international marketplace.

Internal Factors: Political Infighting, the Role of the


Military and the Civil Society
The debate and ratification of the new constitution illustrated the
fragility of the ruling coalition and the fractured nature of elite political
cooperation in Thailand. Prime Minister Chavalit was the head of a six-
party coalition, which would be difficult enough to work with, but even
within his New Aspiration Party there were wide rifts, as illustrated by
Sanoh’s vehement and active opposition to the charter. Seemingly
innocuous remarks by influential leaders gave some cause for concern
that the military was silently pulling the strings from behind the scenes.
As the economic crisis escalated in August 1997 and the opposition
Democratic Party called for a censure vote in parliament, Privy
Councillor Prem Tinsulanond (a former prime minister and general)
told politicians, “In the crisis we are now in, we cannot afford to be
divided-particularly government leaders and the opposition.”38 His
remarks were taken as a warning to the Democrat Party not go ahead
with a no-confidence motion against the government. Senior Democrat
Party MPs reacted negatively to these comments. Surin Pitsuwan, a
senior party official, said, “It looks like the top brass are in charge of the
country. It doesn’t augur well for the process of democracy.”39 Yet, it was
also the military that favored passage of the reform charter and helped
encourage Chavalit to ultimately support it. The prime minister had
traditionally enjoyed close relations with the military—he is a former
general himself—and the military seemed to try to head off political
instability by backing Chavalit’s government during the economic crisis.
However, Chavalit’s rectitude in supporting the constitution and his
inability to really tackle the economic problems facing the country led to
the military’s support of his resignation. Additionally, although there
had been large public protests advocating for the new constitution and
46 ● Political Change and Consolidation

then pushing for Chavalit’s ouster, by themselves these protests were not
the deciding factor. Right up until the week of the vote in parliament,
Chavalit had held back from giving a definite statement about his posi-
tion on the charter and through the fall he had ignored public outcry to
step aside. Chavalit had once been called the “great compromiser” by the
press.40 When he was no longer able to make policy effectively or to
command support from key players, it was time for him to go. Pressure
from within his own tight circle of supporters (military, party, and business
leaders) seems to have convinced him that he no longer had enough
credibility and clout to lead. “Even his closest fund-raisers told him to
resign.”41
As described earlier during the discussion on the political chaos that
accompanied the financial crisis, there was significant pressure from civil
society and from segments of the population at large. Like the literature
on political transitions describes, there were demands from opposition
leaders outside of power and (less often discussed by transition scholars)
from the masses. Business groups in Bangkok held rallies in support of
the passage of the new constitution, and thousands of people demon-
strated in the streets of the capital during August and September to force
the government to take notice of their discontent. While my assessment
is that ultimately the deciding factors in the passing of the political
reform measure were internal and elite-driven, there is no doubt that
politicians were impacted by the vocal actions of NGOs and the larger
society. This may have been especially true of the opposition Democratic
Party. Despite being a conservative party and having reservations about
what the new constitution would do to party members’ power and inter-
ests, Democratic leaders made it clear that they would vote in favor of its
passage. This showed that they clearly saw the tide of public opinion in
favor of the constitution and felt that supporting it could swing support
in their favor.

External Factors: Pressure from the IMF and Global Capital


The IMF claims that it steers clear of politics, but there is no question
that both the IMF and “the market” wanted to see political reform,
stability, and strong policy making. When it became apparent that
Chavalit could not deliver these, there was a strong sense that external
forces supported his departure as prime minister. Once Chavalit and the
six-party ruling coalition made the decision to accept the IMF bailout in
August, they knew that they would be turning over significant power to
this international lending agency.
Thailand ● 47

An IMF loan comes with a high political price for the government which
is required to surrender sovereign control over the country’s economic
policies and comply with austerity measures, such as raising taxes cutting
spending and removing subsidies.42

In essence, once under an IMF program, Chavalit’s government would


be severely constrained in its ability to reward supporters with govern-
ment largess. The flip side, however, was that without accepting IMF
assistance, the country would remain without badly needed liquidity to
restore normal functioning of the economy, and investors (both domestic
and international) remained worried about the security of their
investments. Agreeing to an IMF loan sends a signal that the country
will take needed steps to clean up the economy, improve fiscal trans-
parency and accountability, and adhere to responsible economic policy
making. Ultimately, Chavalit agreed to the IMF bailout and some of the
tough measures that the government was supposed to enact included the
following:

Cut government and military spending; stop the bail-out of troubled


property and finance sectors; raise excise and sales taxes; raise interest
rates; liberalize trade in oil and consumer goods; cut the import of luxury
goods; cut budget of state enterprises; privatize and downsize state
enterprises.43

The goal behind such austerity is to improve efficiency, transparency,


and accountability. In theory, implementing these policies sends a
message to investors that business decisions will be made based on
maximizing profits for shareholders, not on rewarding business and
political partners. Likewise, the IMF requires countries taking large
loans to severely cut government and deficit spendings.

Connection Between the Economic Crisis and Political Reform


There is no question that the financial crisis of July 1997 served as a
catalyst for the passage of the new constitution. Afraid of further political
chaos, domestic and international investors withdrew until they felt
reassured that political reforms would go forward and that politics
would stabilize and leaders would be able to make and implement
coherent economic policy.

As the baht slithered downwards in the opening hours of the debate [over
passage of the new charter], even conservative politicians were forced to
48 ● Political Change and Consolidation

reckon with economic realities. “There are some clauses I don’t like, but
because of the economy we have to accept it,” says Pongpol Adireksarn, a
leading member of the opposition Chart Thai Party.44

Had they not voted in favor of the constitution, members of parliament


faced the threat of a further economic decline, something no one wanted
to confront.
Although there is not really a consensus among scholars on what the
political fallout will be in the wake of an economic implosion, there is a
general trend that finds more recent economic crises do not cause demo-
cratic countries to become more repressive, and in less democratic coun-
tries, crises can help democracy evolve.45 While there is diversity in
methodology and variation in results, much of the literature finds that
political mobilization from below during an economic crisis can either
help consolidate democracy or undermine it, depending on other cir-
cumstances. In the case of the Latin American debt crisis of the 1980s,
Karen Remmer found that public outrage over the handling of financial
problems led to the ouster of incumbent governments but that overall
democracy was strengthened.46 My analysis shows that it is not enough
to credit the financial crisis for the constitution’s ratification. Instead, I
offer the more nuanced explanation that the crisis caused political elites
within the government to realign themselves with others within and out-
side of government. This is closer to Haggard and Kauffman’s work on
the political economy of democratic transitions, discussed earlier. Like
other transition theorists, they see political reform and consolidation as
largely driven by elites, but add that an economic crisis can change
political alliances and conditions for reform.

Changes Under the 1997 Constitution


The 1997 Thai Constitution is a comprehensive charter that tries to
offer something to everyone. There is a mix of liberal and conservative
ideas represented in its clauses. The most significant elements of the
document are the articles that address electoral reforms and the creation
of new bodies to check and oversee corruption and abuses of the political
process. Also noteworthy are the articles that deal with civil rights. The
following articles deal with electoral reforms47:

● Voting is made compulsory (Article 68).


● The Appointed Senate is replaced by an elected Senate of “non-
partisan” representatives (Articles 126, 127).
Thailand ● 49

● The old multi-member constituency system is replaced by a mixture


of single-seat constituencies and proportional representation (using
a party-list system) (Article 98).
● Constituency Members of Parliament are no longer allowed to
serve as ministers in the government (to do so they must step down
as MP) (Article 118).
● Members of Parliament must have at least a bachelor’s degree
(Article 107, 3).
● Ministers may come from the party list (Article 119).
● Members of Parliament are not allowed to switch parties during the
90 days preceding an election (Article 107, 4).48

The overarching goal behind these modifications was to separate executive


and legislative power. “Parties were expected to place senior, reputable
figures on the party list so that they could be ready to assume ministerial
posts, while local hoodlums, if elected to parliament at all, were to be
confined to representing their districts.”49 The drafters of the charter
hoped that by making voting mandatory, it would be more difficult and
more expensive to buy votes. In making senators forgo party affiliation,
they thought that these representatives would have to be well-known and
wise in their own right, “above the fray of day-to-day politics.”50
The three most important institutional changes stemming from the 1997
charter were the creation of new bodies to oversee the political process.

● A Constitutional Court with 15 judges, appointed by the King with


the advice of the Senate. The Court has final say on the interpretation
of the Constitution.
● An election commission (selected by the Senate) to oversee elections.
It can disqualify candidates and mandate new elections.
● A National Counter Corruption Commission with the power to
investigate the financial affairs of politicians and their families. It
can recommend that the Senate remove corrupt politicians from
office.51

Status of Democracy Today?


Weakening Power of the Military
Although the military’s power, prestige, and legitimacy had been declining
since the end of the Cold War and the bloodshed after the 1991 coup, it
50 ● Political Change and Consolidation

showed that it was still a vital player in Thai politics when it (indirectly)
intervened to get Prime Minister Chavalit and reluctant members of
parliament to agree to the passage of the 1997 constitution. Since the
1930s the military has been one of the major institutions in Thai politics
and thus it is no surprise that it has both been an obstacle and a pro-
moter of democratization. There is no question but that the military’s
involvement in the 1991 coup and the attempts shortly thereafter to
handpick political leaders were a distinctly undemocratic action and
these actions resulted in a major loss of legitimacy. Whereas previously
people saw the military as an important enforcer of stability and a
promoter of economic growth, after 1991/92 a larger number of people
began to question its role in politics at any level.
Not only has the military been a national security force and a political
actor, it also has a number of business interests that make it a significant
part of the Thai economy. It owns media outlets that provide it power to
impact public opinion on a variety of different subjects. The military
controls the Thai Military Bank (TMB) and had used it for financing
procurement of weapons and for forging alliances with a number of busi-
ness heads seeking financing for economic development projects. While
the TMB initially escaped controls imposed after the economic crisis in
1997, it was later forced to allow increased investment and control from
foreign and nonmilitary sources. Holdings of the military and its allies
in the bank shrank from 43 to 25 percent.52
Since the 1991/92 coup people have also questioned the military’s
ownership of 221 radio stations and 2 television channels. There have
been legitimate questions asked about the risk this poses for democrati-
zation. Demands increased after 1992 for liberalization of the media (the
military regime had attempted to suppress news about military shootings
during the coup).

These demands eventually led to Article 40 of the 1997 Constitution,


which placed electronic media frequencies “in the public domain,” under
the control of “an independent public organization” charged to operate
them “in the best interest of the people.” Political reform has thus under-
mined the military’s monopolistic control of the mass media, which had
been both an economic and a political asset to the armed forces.53

In the period after the 1997 crisis the Democratic Party and Prime
Minster Chuan Leekpai worked hard to dampen the control the military
once had over politics and to give it new sources of prestige. The prime
minister took over the post of defense minister himself instead of
appointing a retired general, and he appointed an ally, General Surayudh
Thailand ● 51

Juranondh, as army chief. Chuan gave military heads a fair amount of


independence in promotions and he worked on behalf of the military to
purchase F-16 fighters from the United States (quite an expense in the
aftermath of the financial crisis). Thailand took a more active role in
ASEAN, the Association of Southeast Asian Nations, and the Thai
military took part in peacekeeping operations in East Timor. For this it
won international appreciation and prestige. The military was also given
a new job in helping to stop the flow of drugs into Thailand from various
points of entry. These changes have given the military an opportunity to
change its focus from politics and commercial entanglements to
operations more in keeping with a military in a democratic society.54

The 2001 Election


The 2001 election was the first parliamentary one held under the rules
of the 1997 Constitution and everyone watched it carefully to see if the
corrupt practices of the old electoral process would continue. Ironically
(since anticorruption sentiment had been one of the driving forces
behind popular protests for political reform in 1997), Thaksin Shinawatra,
a telecommunications mogul who was facing corruption charges, won a
landslide victory and made his party Thai Rak Thai (TRT, Thai Love
Thai) the first one in Thai political history to achieve an absolute major-
ity in parliament. Evidently, people were not deterred by the National
Counter Corruption Commission’s (NCCC) ruling that Thaksin concealed
portions of his wealth by transferring stock to family members and
household employees. If the Constitutional Court had agreed with the
NCCC ruling, Thaksin could have been barred from public office for
five years.55
Despite the charges against Thaksin, he strongly appealed to voters.
Many people interviewed said that his experience as a business tycoon
was good for Thailand.

“I voted for Thai Rak Thai because Thaksin is a successful businessman


and Thailand needs a prime minister who has expertise in economy,” said
a civil servant in her 30s . . . In today’s world, a country’s prime minister
or president should also be country’s top salesman. “I believe Thaksin will
sell more than other politicians, and Thais will benefit from it,” said
Sirivat Voravetvuthikun, a property-dealer-turned-sandwich-seller.56

During the campaign Thaksin promised voters very specific policy


initiatives. For example, he pledged to charge just thirty baht (seventy
cents) for a visit to a public hospital; to provide each village in the country
52 ● Political Change and Consolidation

a microcredit fund of one million baht, and to give farmers a three-year


moratorium on debt payments.57
The 2001 election did result in some of the intended consequences of
the constitutional changes; small parties were badly beaten and sent into
oblivion, and medium-sized parties only won a few seats. These changes
were intended to improve stability within parliament and it seems to
have worked. The new commissions were established to clean up elections
and to have an institutionalized process to challenge fraudulent ballots
and vote buying. This has happened. In the 2001 election large numbers
of ballots were declared invalid, and politicians and voters demanded
recounts in a significant number of districts.58 The Election
Commission also was forced to schedule additional rounds of voting
because of unfair and dishonest voting in certain polling places or when
MPs were given “red cards” for charges of gross corruption or vote buying.
Red cards force candidates to withdraw from the election.59 When all the
additional voting was done and the NCCC concluded its investigations
and punitive actions, the result was that Thaksin’s party did win an
absolute majority and the consolidation of power both within the
executive branch and within Bangkok (rather than in the provinces)
began in earnest.

Antidemocratic Tendencies and Explanations Why


Since Thaksin was elected in 2001 Thailand’s economy has improved
and by many measures the prime minister was one of the most successful
leaders the country has seen in generations. No previous Thai government
lasted a full four-year term, yet mid way through his term people “are
asking not whether Mr. Thaksin will complete his current term, but how
many terms he will serve.”60 After making bold specific promises during
his campaign, he went on to actually fulfill them. Surprising some
economists and many in the international economy, the government’s
spending helped boost the Thai economy, it grew significantly from
2001 to 2003 (table 1.1).
However, Thaksin’s government embarked on several popular cam-
paigns that had negative consequences for civil rights/civil liberties and
that ultimately called into question the very nature of Thailand’s political
reforms. The most glaring example of this was the “war on drugs.” Prime
Minister Thaksin pledged to eradicate illegal drugs by 2005. The
government launched an all-out assault on drug dealers and those
suspected of being involved in the illegal drug trade. The “war”
gave police and some elements of the military almost a free hand in
Thailand ● 53

Table 1.1 GNP growth in Thailand, 2000–200361

Year Growth (in %)

2000 4.76
2001 2.14
2002 5.41
2003 6.74

GNP, gross national product.

questioning, detaining, and even killing those thought to sell or trade in


drugs. By spring 2003 fifteen hundred suspected dealers had been killed
in raids carried out throughout the country. Of these several were later
shown to have no connection to drugs and were simply (and tragically)
killed by zealous police officers eager to make a public show of their
efforts.62 While there was some discussion and outcry about the heavy-
handedness of the campaign and the violations of civil rights in the name
of stamping out the evil of drugs, the war on drugs was immensely pop-
ular and there were few significant challenges to the brutal tactics.
The prime minister also tried to consolidate his own power through
greater manipulation and control of the media. As discussed earlier,
Thailand’s broadcast media (television and radio) have long been
controlled by a small number of business elites and the government and
military have been the primary holders of these licenses. Many see
Thaksin trying to expand his influence in unseemly ways. Virtually all of
the TV stations are either government-controlled or owned by his family.
Moreover, Thaksin bought the only private one and fired many of its
journalists.63 This gave him either direct or indirect control of what
Thais saw on television, the most popular source of news and information
throughout the country. One of the other tools that Thaksin and his
family and associates were charged with using to influence what people
see on TV was the ability to direct advertising revenue to supportive
outlets, and conversely to pull advertising from critical sources.

Even before his election victory, staffers at the ITV television network, in
which Thaksin’s family business was then acquiring a controlling interest,
publicly complained that they were being pressured to slant the news in
favor of Thaksin’s party. They were subsequently sacked, a move later
ruled illegal by Thailand’s Labor Court.64

Once in office, further incidents gave critics reasons to be alarmed.


Government-controlled radio and television stations pulled programs
54 ● Political Change and Consolidation

that were critical of the new regime off the air. Advertising from the
government and from Thaksin’s related businesses was allegedly withheld
from critical media outlets. In 2003 Transport Minister Suriya
Jungrungreangkit’s family (close Thaksin allies) purchased the largest
stake in the corporation that owns The Nation.65 Print media, newspapers,
and the like are privately owned and a myriad of viewpoints can be
found both in Thai language papers and in English papers. Several
papers were frequently critical of the regime. However, there were charges
that independent views were not appreciated by the ruling powers. In
February of 2004 the editor of the Bangkok Post was shifted out of his post.
Critics of Thaksin charge that his allies forced Veera Prateepchaikul’s
departure from the news desk. “ ‘I would describe the Thai media at the
moment as being in an intensive care unit,’ said Kavi Chongkittavorn,
and editor of The Nation, the Post’s main rival.”66
Like not so democratically minded leaders before him, Thaksin has
promoted relatives to senior positions in the army and in the police. Two
former members of his staff now sit on the constitutional court.67
Despite the encroachment on freedoms, as of the summer of 2005
Thaksin and TRT’s popularity was at an all-time high.68 The opposition
Democratic Party did not try to counter some of the more aggressive
actions by the government and they seemed at a loss for how to gain back
a more significant showing of support.
In January 2006 mass protests against Thaksin began. His family
made a tax-free profit of about US$1.9 billion in the sale of their business
Shin Corp. to a Singapore state firm. Protests continued throughout the
winter. In April Thaksin called for a snap election. The three lead oppo-
sition parties boycotted Thaksin’s attempt to shore up his power.
Although TRT won, the election was ruled constitutionally invalid
because not enough seats of the lower house of parliament were filled.
Thaksin is serving as a caretaker Prime Minister (he remains the head of
TRT) and new elections will be held in October 2006.69
The events of the winter and spring 2006 illustrate conflicting things
about the state of democracy. Protestors in Bangkok and opposition
party elites decided to achieve their aims outside the process of electoral
politics. Thaksin thought he could use his support from rural voters
(where he has high support because of his social welfare programs) to
silence his critics with a quick election. He figured a win at the polls
would bolster his legitimacy. Instead, the hasty election further under-
mined it and he has been forced to promise not to run in the upcoming
election. This episode shows that there is not full confidence from people
or political elites that the system, such as electoral institutions or
institutional checks and balances can protect or assert their interests.
Thailand ● 55

How should we try to explain or reconcile this backsliding on the


reform efforts of 1997? There are internal and external pressures
contributing to the failure to consolidate the democratic reforms of
seven years ago. First, there is the impact of Thaksin’s leadership. His
attitudes, values, and behavior severely injured the chance for democratic
consolidation. Then there are the unintended consequences of the
institutional reforms, intense pressure for greater economic performance,
and the renewed internal security threats in the south. Externally, the
IMF and global investors are now less worried and focused on account-
ability and transparency. Now major external pressure is coming from
the United States and its “war on terror.” Stability and antiterrorist
actions are what the United States and global investors are worried about
in the current international climate.

Internal Pressures
One goal of the constitutional reform was to make the political system
more stable, certainly a laudable goal in a country where one could
hardly keep track of the governments since they changed so frequently
and where decisive policy action was nearly impossible. Improving
stability came through the consolidation of power within a smaller
number of political parties, and disallowing politicians from switching
parties at will. However, enhancing stability also made it harder to
unseat a government. Both the election commission and the NCCC
have tried to do the jobs that they intended, but they too have been
accused of being overly friendly toward particular political elites and of
being subjective in who they chose to investigate and which elections
they invalidate. Selecting members of these commissions and judges for
the Constitutional Court has become partisan and political.
Violence in the south of Thailand became a threat to Thaksin’s
government and its image at home and abroad. There are about six million
Malay Muslims in Thailand, out of a population of sixty-six million, and
they live mostly in the southern provinces of Yala, Narathiwat, and
Pattani. A separatist movement petered out there until the late 1980s,
but since then the region has been disturbed by sporadic violence perpe-
trated by a small number of remaining hard-line separatists allied with
those involved in illegal businesses such as the drug trade. In January of
2004 violence flared when separatists burned down twenty schools and
stole three hundred weapons from government armories; four soldiers
were killed in the conflict and the government began a violent crack-
down against Muslim suspects.70 On April 28, 2004, a coordinated
attack was carried out against police stations and temples across southern
56 ● Political Change and Consolidation

Thailand. The government’s response was swift and deadly. The Thai
military, under Defense Minister Chettha Thanajaro, ordered two bat-
talions of soldiers, about one thousand in number, to southern provinces
to quell the attack. Over one hundred attackers were killed along with
five soldiers and policemen. In the process of hunting down suspected
militants, Thai troops stormed a historic mosque in Pattani and killed
the thirty young men taking refuge inside.71 Local residents have
expressed outrage and anger at the killings, which have continued. While
Thaksin has said that the violence was instigated by Muslim separatists,
possibly with the help of Muslim extremists from elsewhere (possibly
members of Jemaah Islamiyah, JI, from Indonesia), it is not at all clear
that this is the full truth. Southern Thailand is rife with political rivalries,
criminal gangs, drug barons, and long-standing conflicts between the
military and the police.72 There is no evidence that local groups have
made connections with JI or other regional Islamic militant organizations.
It seems most likely that problems stem from resentment against Bangkok
for neglect and repression. The government’s extreme response made res-
idents and human rights groups critical, yet again, of Thaksin’s regime.
After achieving political reform in 1997, many activist groups seemed
to have lost their coherence and their motivation for vocal action.
During the economic crisis people and NGOs were mobilized as opposi-
tional forces to the government. Then from 1998 to 2006 it seemed that
civil society organizations had become more of a regular part of the
political process, working with, or lobbying through, institutional
channels to achieve their particular interests. While NGOs are not
agents of the state, and are certainly independent actors, in some ways by
becoming part of the regular contest over policy, they seemed to have
lost some of their edge and power as a force of opposition. However, the
protests in 2006, led by the People’s Alliance for Democracy (PAD)
showed that citizens can be mobilized against money politics and that
perhaps political consciousness has changed for some Thais.73 Civil society
and NGOs are highly diverse. The economic crisis provided an opportu-
nity for groups to come together in opposition to the government;
however, there is no unifying problem to solve today. So, environmental
groups, women’s organizations, media watch dogs, and so on, all work to
further their own goals and interests and have lost some of the power
that comes with joining forces for a common goal.74

External Pressures: IMF/Global Investment


Globalization can be a positive force for political reform and liberalization
or it can harm the process of democratization. One example of how
Thailand ● 57

globalization can assist in the process of political reform is the example


mentioned earlier of the military’s control over the TMB. Where this
medium-sized bank used to be totally under the control of the armed
forces, in an attempt to improve banks’ and financial institutions’ capital
f lows and solvency, the Chuan government forced many banks and
f inance companies to allow foreign investment. TMB did not escape
these pressures. The military’s holdings in the bank shrank from 43 to
25 percent of assets, while nonmilitary and foreign holdings in the bank
increased from 8 to 25 percent. “Globalization had accelerated the trend
of removing the military from a dominant role in the Thai Political
Economy.”75 Other chapters of this book show how the IMF encouraged
greater transparency and accountability in the wake of economic crises.
Also, depending on the internal political landscape, the IMF empowered
domestic political actors who favored political reform. Six years later it is
far from clear that global forces are beneficial to greater democracy.
External pressures on Southeast Asian countries have now changed.
When terrorists attacked the United States on September 11, 2001, and
then when the United States decided to attack Iraq in the spring of 2003,
President Bush’s administration worked hard to convince countries
around the world to join the United States’ global war on terror. Since
1954 Thailand has been a treaty ally of the United States, the highest
level of alliance outside of NATO; yet, after the 9/11 attacks Prime
Minister Thaksin declared that Thailand would remain neutral in any
forthcoming military incursions. Despite Thaksin’s desire to seem inde-
pendent of U.S. policy, President Bush in October 2003 declared
Thailand to be a “major non-NATO U.S. ally” and promised to negotiate
a desirable bilateral trade agreement with Bangkok.76 Thailand did not
join the United States’ “coalition of the willing” in invading Iraq, but it
did help American security agents capture Indonesian terrorist suspect
Hambali, a Bali bombing suspect. Also, Thailand has sent troops to
Afghanistan and to Iraq for reconstruction efforts.77 While the Thai
population seemed displeased at President Bush’s attempt to draw
Thailand closer to the United States, when violence flared in the south in
the winter of 2004, public opinion seemed to begin to change as people
worried that Islamic violence and possibly links to international terrorist
networks might be closer to home than believed. The United States has
overlooked the Thai military’s zealous and violent behavior in the south
in the name of fighting Islamic terrorism. While Thaksin was criticized
by regional leaders for his response to escalating tensions in the south,
and it is clear that military and police behavior violated citizens’ civil
rights, there was little condemnation from the United States because it
was convinced that Thailand is an ally in the war on terror.
58 ● Political Change and Consolidation

Through the winter of 2004 Thaksin’s popularity looked unchallenged.


However, in just a few short weeks several things showed that even he
may have vulnerabilities and the electorate may not give him uncondi-
tional love. In February and March the government was faced with three
serious crises: the deadly bird flu virus,78 separatist violence in the
Muslim-dominated south, and mass protests over the handling of priva-
tization of state enterprises. Worry and displeasure at his inability to
solve these difficult problems caused people to take a harder look at the
heavy-handedness his regime has used in dealing with critical media
outlets and at precisely how success has been achieved in once-popular
campaigns like the war on drugs, but there was little popular outcry. By
early 2005, despite the encroachment on freedoms, Thaksin and TRT’s
popularity was back at an all-time high. The opposition Democratic
Party was unable to counter some of the more aggressive actions by the
government and they seemed at a loss for how to gain back a more
significant showing of support. In the February 2005 parliamentary
elections, TRT won a landslide victory. Thaksin’s party controled 377 of
500 seats. Suranand Vejjajiva, TRT party spokesman, argued that the
electoral success demonstrated that the party had won the hearts of the
people and that Thaksin’s ability to efficiently and quickly tackle economic
problems translated into an overwhelming victory.79 The sale of Shin
Corp was the catalyst for greater anger and mobilization to oust him.
However, TRT still controls parliament and is likely to win a majority of
seats in October 2006.

Conclusion
Democracy has not been fully consolidated in Thailand. According to
measures of democratic consolidation such as leaders playing by the rules
of the game and not seeing themselves as above the law, and respect for
civil rights, there are several troubling signs for Thailand. First, Prime
Minster Thaksin did not exactly want to “play by the rules of the game.”
He was brought up on corruption charges and was able to avoid punish-
ment for what the commission found were violations. He seemingly
tried to manipulate media outlets critical of his regime. He used draconian
tactics to implement security policies against Muslims in the south, and
against those involved in the illegal drug trade.
In 1997 Thais seemed to overwhelmingly want greater democracy
and accountability. The desire for democracy and democratic attitudes
that have developed over time in Thailand seem to be overshadowed by
desires to improve economic growth and quality of life issues (even if
Thailand ● 59

this means an erosion of civil rights for some citizens). Hence, maybe,
one of the explanations for the weakness of democracy has to do with
people’s political values. Do Thai citizens value democracy? The answers
are mixed. In one of the few studies of Thai attitudes about democracy,
Albritton and Bureekul found overwhelming support for democracy. In
2001, 54.7 percent of those surveyed were fairly satisfied with the state
of Thai democracy; moreover, 34 percent were very satisfied with
democracy. Of the respondents 83 percent said that democracy was
always preferable. On the surface Thais are highly supportive of the
“idea” of democracy. However, the survey also found that democracy has
less support among elites, especially Bangkok elites, than among rural
majorities. Also, these two groups seem to understand democracy differ-
ently. When democracy includes a high degree of political conflict, there
seems to be a preference for curbs on freedom of expression if social
order is jeopardized. Trust in political parties is low and the 2005 election
clearly shows that personality matters a great deal. Although higher
numbers of rural voters profess to care about democracy, these voters
seem to view candidates favorably when they bring tangible benefits to
the district. Hence Thaksin’s rural support in 2006. Political ideas,
platforms, and larger policy matters are secondary to personal gain to be
had from elected officials. In addition,

The traditional emphasis on the “middle class” as an engine of democracy


appears to be declining in favor of a view that middle-class support for
democracy exists primarily when it coincides with class interests in curbing
the power of government. This means that one cannot expect middle-class
enthusiasm for democracy when it poses conflicts with private interests of
the middle-class.80

Ultimately then, it is hard to see that democratic ideals matter in more


than an abstract way to many Thais. Yes, democracy is important to
people, but it means different things to different groups and may be less
critical than economic self-interest.
In looking both at Thailand’s experience and more comparatively at
what happened around the region when the economic crisis hit, I con-
clude that political reforms in 1997 were the product of elite actions and
decisions, influenced by internal and external pressures. There are different
groups of elites that mattered during this period. Internal pressure for
political reform came from the following: some elected and appointed
officials within Chavalit’s regime, elites in civil society who drafted the
Constitution, military leaders such as General Chettha Tanajaro who
60 ● Political Change and Consolidation

pushed for the new constitution, the king, and activists who helped
mobilize groups to protest and agitate for the passage of the document.
External pressure came from the IMF and international investors who
wanted to see Thailand stabilize its economy. It became clear that the
economic problems were bogged down in the political chaos of the time
and so until the politics of the moment were resolved, the economy
would not stabilize. Again, the factors that tip the scales toward liberal-
ization or democratization are pressures from reform-minded politicians
and military generals, mass protests in Bangkok, and pressure from the
IMF. In many ways this is a strange confluence of variables that produces
positive political change. The same coincidence of interests no longer
exists.
Today, forces for political reform are mixed. Thaksin was far from
being a beacon of liberal democratic values, his party TRT has a lock on
political power, he has weakened key tools of democracy such as the
press and opposition parties. Civil society groups are divided, some are
focused on social welfare issues, others have chosen to assert interests
outside of electoral institutions. It is unclear if they will be able to work
to achieve larger political changes. International pressure from the
United States and from international investors is more focused on secu-
rity concerns and/or economic stability than on political liberalization.
To this end, Thaksin enjoys rural support at home and from abroad, thus
giving him little reason to implement greater measures of openness and
accountability. The world would certainly rather not see a repeat of the
1997 economic meltdown, however, it did provide a unique set of
circumstances for various groups to see common interest in advancing
political reforms. The situation is not as clear today.
CHAPTER 2

South Korea: The Final Hurdle


for Democracy

I
n the summer of 1997, as the economic crisis was tearing through
countries in Southeast Asia, South Korea seemed to think that it would be
spared the contagion. Throughout 1997 there were concerns over the
banking sector and over some of the large Korean conglomerates, chaebol,
which had become too large, too diverse, and highly leveraged. Giant
firms such as Kia Motors and Hanbo were struggling. By summer many
foreign banks had stopped or limited their lending to Korean firms, but
analysts seemed to think that South Korea would avoid a meltdown.1 As
the presidential election heated up in the summer and fall of 1997, the
candidates were not talking about the economy and there was no sense
of a looming crisis. Nonetheless, by November 1997, South Korea was
the latest country to fall prey to massive financial upheaval and political
turmoil. What impact did the crisis have on South Korean politics? Of
the countries studied here, Korea in 1997 was arguably the most
democratic and was certainly the most developed economically. Yet, the
economic crisis served as a catalyst for political reform in South Korea,
just like in Thailand and Indonesia. Kim Dae Jung (DJ), longtime
democracy advocate and opposition politician, won the 1997 presidential
election, ending the domination of Korean politics by the more conser-
vative and status-quo party (called the New Korea Party in 1997). What
about the crisis triggers similar political reforms in Korea as elsewhere,
and were these changes significant and long-lasting? In other words, did
the political changes that came about in the wake of the financial crisis
really change the political system and what are the prospects for further
change (if necessary) in the future? To answer these questions, this chapter
begins with a brief overview of South Korean politics, then looks at the
1997 crisis and the political changes that follow. Lastly, the chapter
62 ● Political Change and Consolidation

examines explanations for the successful political reforms and what has
happened since 1997.

Explanation of Korean Politics


Since the division of the Korean peninsula in 1948, South Korean politics
has been dominated by autocratic leaders. In the immediate aftermath of
the Korean War, 1950–1953, successive authoritarian regimes used the
uncertain security situation as the justification for repression and intol-
erance of opposing political views. Over time, military leaders clashed
with active student and labor protestors. National security and economic
development were the primary and secondary goals, respectively, of
Korean leaders.
The current Korean political system is a republican system with a
strong executive, the president, and a unicameral National Assembly
with 299 seats. The president serves for a single five-year term, and
legislative elections are held every four years. Representatives in the
National Assembly are chosen in two ways: there are winner-take-all
elections for single member districts (243 of 299 are chosen this way),
and 56 seats are determined by proportional representation. Korean
political institutions and practices have changed a great deal over time;
while the current system is a presidential one, in the past, there was a
brief experiment with a parliamentary system, and different voting
systems have also been tried and altered.
Moving beyond simple explanations of Korean political institutions,
there are several significant features of the Korean political system worth
mentioning here. First are the strong regional ties and affiliations that
help explain outcomes in national elections. Second, political parties
have traditionally been weak institutions. South Korean politics reflects
regional divisions in the small country. Authoritarian leaders favored the
southeastern region of Kyongsang with development projects and fund-
ing, causing resentment in the southwestern region of Cholla. The last
two presidents came from Cholla and won with over 90 percent of the
vote there. The long-dominant Grand National Party (GNP), formerly
the New Korea Party, has tended to do well in Kyongsang—they won
71 percent of the votes there in the 2002 election. Seoul, with about half
of the electorate, represents the swing vote.2
Political parties in South Korea are based around the leadership of a
(often) well-known office seeker. Leaders frequently decide to change the
party’s name, and legislators are prone to switching parties.3 This makes
it hard to develop party allegiance and to promote grassroots organizing
South Korea ● 63

on behalf of the party. The institutional weakness of parties comes from


a legacy where parties have at times been outlawed and emasculated. In
the early 1950s there were over forty political parties, but by the early
1980s opposition parties had been outlawed. So, instead of identifying
and supporting one party over time, people have often voted based on
regional ties and the popularity of the party leader. Even though political
reforms and democratization were initiated in 1987, parties today are
still highly unstable and fragmented. Every major party has metamor-
phasized (changed its name and many of its legislators). Despite differ-
ences in party platforms, most of the parties are basically conservative.
They are vehicles for officials to win office and there are few efforts to
recruit mass membership or participation outside of getting votes in
elections.4
Also important to understand is the relationship between the state
and big business, specifically the chaebol, or large conglomerates that
dominate the South Korean economy. Beginning under General Park
Chung Hee, Korea began a concerted effort to industrialize and develop
its economy. Close ties were forged between the state, the banking sector,
and the chaebol. For years state bureaucrats were highly successful at
economic planning and promoting industrial growth. The Korean econ-
omy soared, per capita income went from roughly US$100 in 1963 to
US$14,000 in 2004. South Korea went from a poor, peripheral country
in the global economy to the eleventh largest economy in the world. The
state was able to make capital available to the chaebol that encouraged
them to expand and diversify their business enterprises. This very model
of developmentalism, which was so successful in the 1980s and through
the 1990s, was also the very foundation of problems for the economic
crisis.
By the mid and late 1990s, it became increasingly clear that the
corporate sector was highly leveraged and had diversified too far from
businesses where they were competitive. State bureaucrats tried to rein in
their behavior, but clashed with elected officials, the ruling elite of the
country, who relied on the financial support of big business to win
elections. Bureaucrats tried to impose credit controls and loan ceilings
on the chaebol, but this did not stop the huge short-term debt incurred
by many of South Korea’s biggest and most prestigious companies.5
These financial problems will be discussed in detail later in the chapter.
The political legacy of the authoritarian order has not fully diminished.
Regionalism and weak political parties still remain, and despite the
economic crisis and attempts to reform the political order, corruption,
big business, and money politics are still part of the system today.
64 ● Political Change and Consolidation

Democratization in South Korea


Prior to the 1997 economic crisis, South Korea had already embarked on
significant efforts to reform and democratize the authoritarian political
system. Collapse of military rule occurred in 1987 under President (and
General) Chun Doo Hwan. General Chun began his rule of South Korea
as an undisputed strongman and military leader. He played a significant
role in the crackdown on protests in the Kwangju Massacre in May
1980,6 initiated a sweeping set of reforms against the media, and
brooked no political dissent. This began to change dramatically in 1987.
Increased hostility between the military regime and opposition forces
(labor groups, students, and democracy activists) led to a massive uprising
in the spring of 1987. Many expected horrific results like the massacres
in Kwangju a few years earlier. However, Chun’s handpicked successor to
take over in the upcoming elections, Roh Tae Woo (presidential candidate
of the Democratic Justice Party [DJP7]), announced his willingness to
compromise with the opposition and he also agreed to democratic
reforms.
These reforms included a blueprint for a new institutional structure,
the Fifth Republic’s Constitution, which would include provisions for
the following:

1. direct presidential elections,


2. allowance of multiple candidates to contest elections,
3. amnesty for Kim Dae Jung and other political prisoners,
4. protection of basic civil rights,
5. a free press,
6. local self-government and local elections,
7. creation of multiple political parties,
8. improvement of politics and society, anti-corruption efforts.8

Although Chun and Roh were military men, more in the tradition of
General Park than believing in the absolute good of democracy, they
allowed reforms to go through and for elections to take place. Roh was a
product of the military. He had been a colleague of Chun’s, and had
initially been handpicked by him to take over leadership of Korea.
Instead, Roh participated in the first relatively free presidential elections
on December 16, 1987. He ended up winning the election mostly
because Kim Young Sam and DJ split the opposition vote.
Roh took office as president, but opposition parties ended up
controlling the legislature. To try to overcome this divided government,
South Korea ● 65

Roh’s DJP spearheaded a merger with Kim Young Sam’s Reunification


Democratic Party and Kim Jong Pil’s Democratic Republican Party to
form a grand conservative party, the Democratic Liberal Party (like
Japan’s Liberal Democratic Party). Although closely linked to the military
dictatorship of the past, Roh did preside over the passage of numerous
new laws to institutionalize and protect new democratic freedoms.9
In 1993 Kim Young Sam won the presidential election with 42 percent
of the vote. Kim, a civilian, continued democratic reforms by consoli-
dating civilian control over the military and by prosecuting former
generals for military atrocities such as the Kwangju Massacre of 1980.
Generals Chun and Roh were convicted to long prison terms for a variety
of charges: mutiny, treason, and corruption, among others. These trials
were more about holding past military rulers accountable for military
abuses and corruption under their leadership than about charging either
of them with direct responsibility for the deaths in Kwangju.10 Despite
the shift to civilian rule and numerous changes to political institutions
and laws, a few central features of Korean politics remained in place
through the end of the 1990s. Regionalism remained a powerful force in
electoral and distributional politics. Also, money politics was still a
driving force behind a candidate’s ability to win election. The necessity
to raise money for campaigns is directly tied to Korea’s lingering problems
with corruption. Politicians’ family and friends have often used their ties
to the political elite and to business donors to win lucrative jobs or
contracts from big companies.

The Economic Crisis of 1997 and the Presidential Election


of December 1997
Although economists and politicians seemed to think that South Korea
would avoid the brunt of the economic crisis in 1997, there were certainly
significant problems beginning to be apparent in the development strategy
of the country by 1997. Firms saw a decline in sales growth, excess
capacity, and stiff price competition. Most importantly, perhaps, by
1996 Korean companies had some of the lowest profits and highest
capital investment rates in East Asia. External financing was used to
compensate for low earnings as companies looked for cash to both pay
for day-to-day operating costs and for business expansion. Korean com-
panies had some of the highest debt to earnings ratios in the region.11
The Ministry of Finance (MOF) tried to rein in borrowing by the chaebol,
but modest attempts at credit controls and loan ceilings did not stop
huge short-term borrowing. Politicians found it politically impossible to
66 ● Political Change and Consolidation

reform the chaebol for two reasons. First, they provided so many jobs
that it was inconceivable to think of allowing any of the big firms to
actually go bankrupt. The chaebol were de facto welfare providers of jobs
and lifetime security.

Industry composes 42.9% of Korean GDP, compared with approximately


30% for the OECD countries as a whole. Layoffs as a result of bankruptcy,
therefore, affect a large proportion of the work force, as Korea lacks the
cushion against unemployment provided by the large agricultural sector of
Southeast Asia and the service sector of the OECD countries.12

Secondly, elected officials were highly reluctant to try and regulate or get
tough on the chaebol because they were such a significant source of
financial support for politicians.13
In 1997 there were plenty of reasons to be concerned about the gen-
eral health of the Korean economy. Nonperforming loans to Kia and
Hanbo, two of the largest firms in Korea, caused enormous problems for
South Korean banks such as the Korea First Bank. As mentioned, some
foreign banks had stopped or put limits on lending to South Korean
banks or firms. Short-term interest rates for loans were quite high
because of the risk of nonpayment.14 What dominated the news in South
Korea in the summer and fall of 1997 was the upcoming presidential
election. Because presidents can only serve one term, Kim Young Sam
was not running. His government was badly hurt by charges of misman-
agement of the economy and political scandals of corruption or nepotism,
issues that tarnished his party’s candidate, Lee Hoi Cheng.
As the election cycle heated up, it looked like a three-way race
between DJ (running from the National Congress for New Politics
[NCNP]), Lee Hoi Cheng from the ruling New Korea Party (NKP), and
Rhee In Je, who split off from the NKP. Kim had run in each election
since 1971 and had always lost. In August Kim was leading all public
opinion polls by a large margin. A victory for him would symbolize a
repudiation of the long history of military leaders controlling the politi-
cal apparatus.15 By fall the economy was looking even more shaky, but
none of the candidates was talking about it. Kim made an alliance with
his conservative rival Kim Jong Pil from the United Liberal Democrats
(ULD). He did so to keep Kim from running and splitting the vote
(which gave Roh the victory in 1987) and also to reach out to a wider
support base than his traditional backers in labor and leftist groups
could give him.
South Korea ● 67

On November 10, 1997, the Korean won closed at 999 to the U.S.
dollar. From January 1997 to November 1997, the won had lost 18 percent
of its value. Given what countries in Southeast Asia had been through,
the use of Korea’s foreign reserves to try and stabilize the currency would
be dangerous, and Korea had low levels of reserves anyway. South Korean
firms and banks had over US$110 billion in foreign debt that would
now become impossible to pay off. While there was no domestic panic in
November, currency speculators began selling their holdings of won.
Surprisingly, many Koreans seemed unaware of or unworried by the eco-
nomic problems.16
On November 21, 1997, South Korea turned to the IMF for help.
This was extremely humiliating! For a country that had become confi-
dent and self-assured through years of economic growth and success,
for the eleventh largest economy in the world to need to turn to the
IMF for help, was galling to many proud Koreans. The problem was
that there was US$60–70 billion in short term loans that would
come due within a year, and banks and firms had no way to pay
back those foreign loans without an infusion of cash coming from
somewhere. Banks carried 28.5 trillion won (US$27 billion) in bad
loans. 17 In the face of these problems, the stock market plummeted to
its lowest level since 1987. Both Lee and Kim agreed with the decision
to go to the IMF for help. 18
The IMF rescue package, in combination with other contributions
for South Korea, amounted to US$57 billion. But the decision to turn to
the IMF for help was highly combustible. Massive protests erupted and
two thousand students, workers, anti-IMF protestors took to the streets
on several occasions in early December.19 These very protesters were the
core of Kim’s support base. Hence Kim made a statement that said, in
essence, he agreed with the IMF principles, but not with the details. This
vague statement caused the won to slide even further and one week
before the election, Kim stated clearly that he would abide by the agree-
ment with the IMF as it had already been worked out.20
DJ won the December 18, 1997, election with just over 40 percent of
the vote, Lee garnered 38 percent, and Rhee split the vote with 19 percent.
Kim’s margin of victory was a mere 2 percent. As part of his platform to
promote political reforms, Kim took office wanting to introduce a par-
liamentary cabinet system with more checks and balances (and an
enhanced prime minister position with which to reward Kim Jong Pil for
joining his ticket). The GNP still dominated the legislature, so Kim
would have a hard time pushing through some of his reforms.21
68 ● Political Change and Consolidation

Did the Elections of 1997 Signify Genuine Change


or Further Democratization?

Kim’s victory was heralded by many as a triumph for further democratization


in South Korea. Because of his standing as a longtime democracy advocate
and dissident, and because the same ruling party had controlled Korean
politics for so long, Kim’s success was viewed positively by many, both in
Korea and outside. Many political analysts also attributed his win to the
economic crisis. The crisis was seen as triggering protests and renewing
activism by labor groups, students, and others suddenly disgusted with
the way the government and the economy had been run by the previous
generation of leaders. This section will examine two assumptions in
turn: (i) that Kim’s victory was evidence of democratic reforms at work;
and (ii) that the crisis and popular mobilization were the primary cause
of political liberalization. While I do find that the 1997 election is an
example of further political liberalization in South Korea, and the eco-
nomic crisis is part of the explanation, it seems more appropriate to see
this period as a further step forward for Korean democracy, not a radical
jump. And, while the economic crisis is an important element in
explaining successful political reform, it is more of an underlying factor
that acts as catalyst to spark new political dynamics to occur, rather than
the ultimate explanation.
While Kim’s electoral victory in 1997 does provide a significant
opportunity for consolidating democracy in South Korea, I do not view
the 1997 election itself or the crisis as a significant departure from old
ways of politicking. Instead, what occurred in 1997 was a gradual con-
tinuation of a process of democratization, which progressed in fits and
starts beginning in 1987. Until 1997 many of the political changes
evolved from decisions made by political elites. Roh Tae Woo made the
decision to compete for the presidency in open elections, then he went
forward with dramatic constitutional changes to liberalize or open up
the political process. Kim Young Sam, the first civilian elected to the
presidency, oversaw further changes: elections were held in local dis-
tricts, transparency in banking laws were enacted, and Presidents Chun
and Roh were tried and jailed for their role in the Kwangju Massacre of
1979. Progress was not continuous or uninterrupted, however. In 1996
Kim Young Sam fell prey to the old style of politics when he forced
through a highly controversial labor bill and a security bill in the
National Assembly. This heavy-handed action reminded many of the
behavior of the previous military regimes and it sparked a huge outcry of
protest. Demonstrations occurred from December 1996, when the
South Korea ● 69

legislation went through, until March, when activism petered out.22


And, like in the past, coalitions or alliances among political elites had a
significant impact on the outcome of the election.
When DJ looked out at the political landscape, he realized that he
needed to broaden his electoral base, both regionally and ideologically.
He would not have won the election without joining forces with Kim
Jong Pil. Doing so gave DJ a broader regional appeal and he was able to
convince more traditional and conservative Korean voters that he was
not as radical or left leaning as his history might have otherwise indicated.
Some studies of Korea’s transition to democracy give greater credit or
weight to the role played by political activism/mobilization, either from
groups in civil society or through demonstrations and political protests
from mass organizations such as labor and student unions. These analysts
find that these groups formed an alliance in 1987 to mobilize strong pro-
democracy forces against the ruling elite.23 I find that protestors and
efforts by NGOs are important to understanding democratization, not
just in Korea, but also in Indonesia and Thailand, however, these actors
or activities are only parts of the whole puzzle. Certainly, protests and
persistent organizing from groups in civil society put pressure on leaders
to behave in certain ways. However, a bottom-up explanation cannot
solve (well enough) the problem democratic transitions. Why were
protests and mobilization efforts finally successful in 1987 but not
before? The answer is complex.
First, by the late 1980s domestic pressure from groups in society was
coupled with international pressure on South Korean dictators to open
up the system or at least be more accountable and less repressive of their
own people. South Korea was scheduled to hold the Olympics in 1988
and that brought much more international scrutiny than before. Ronald
Reagan also put pressure on South Korea to improve its human rights
record.24 I would argue that it was a confluence of these pressures, from
within the country’s political elite, from civil society and larger mass
organizations, and from external forces that convinced Roh that the
authoritarian system had run its course and that it was time for reform.
What happened to civil society after democratization took hold in
1987? Certainly, the number of student protests, labor strikes, and large
demonstrations shrank dramatically. Was civil society weaker or less
effective in some way after a measure of democracy was achieved? Some
scholars have found that this is the logical course of events. Steven Fish
found that civic mobilization often loses steam and becomes marginalized
in the process of consolidating democracy. Once basic demands for a
more open, more liberal system are met, the “fire in the belly” of opposition
70 ● Political Change and Consolidation

groups may wane.25 In South Korea it certainly seems that activism


changed after the first substantial steps were taken toward democracy. In
fact, activists may have shifted their goals and strategies. Sunhyuk Kim
argues that after 1987 groups refocused their energy to electoral politics
and channeled their interests that way.26 Civil society organizations also
become more focused on narrow areas of concern, such as the environ-
ment. To give one example: the Korean antipollution movement associ-
ation has thousands of members and works to improve environmental
conditions and is strongly antinuclear. It formed a larger umbrella
group, the Korea Federation for Environment Movement, and its goal is
to influence policy.27 Hence activism has not gone away, it has reshaped
itself into a regularized, institutionalized part of democratic politics.
When an issue of concern occurs, these organizations are still good at
mass mobilization; the demonstrations against the IMF in 1997 were an
example of that. Civil society action, or lobbying, is useful as a means of
achieving interest articulation on particular policies. However, almost by
definition, interest groups have more narrowly focused goals. Thus, policies
might be guided by input from organized society, rather than only
dictated by political elites in office. Democratic theory envisions this
sort of process as citizens control or influence their government.
However, lobbying or interest group activity may be too narrow to effec-
tively serve as a platform for broader political change or reform. In order
to achieve greater democratization, it may be necessary to mobilize a
larger segment of the population for action and for this larger group to
have the support of insiders within government or politics.

Explanation of Success or Failure of Reform Ambitions


Like in Thailand and Indonesia, the economic crisis in South Korea was
a catalyst for political changes. Consistent with these other examples,
South Korea’s experience shows that the financial meltdown was important,
not just to spark mass mobilization, but because it also triggered a vari-
ety of internal and external pressures for political elites to behave in
certain ways. DJ needed to back the decision to go to the IMF in order
to broaden his support so that he appealed to more than his traditional
constituency on the left. His partnership with Kim Jong Pil, along with
his clear statement just before the election about sticking to the IMF
agreement, probably earned him a few votes from more moderate or mod-
erate-to-conservative voters. Once in office, Kim, as a real political out-
sider coming in during a time of economic crises (in part triggered by
the unwise practices of big businesses), had an opportunity to try and
South Korea ● 71

clean up the system and to implement political and economic changes.


These changes also had an impact on cleaning up politics and weakening
the effect of money on the political process. Ultimately, Kim was modestly
successful, some changes occurred, but not as much as supporters had
hoped for.

Consolidation of Democracy?
Events Since 1998
After DJ’s electoral victory, he set about to implement a variety of policies.
He initiated a thaw in relations between South Korea and North Korea,
the aptly named “Sunshine Policy.” This included increases in human
and economic exchanges on both sides of the demilitarized zone (DMZ).
Kim also set about trying to reform and to curtail the power and behavior
of the chaebol. Beginning in the 1970s under Park Chung Hee the state
gave heavy support to the chaebol to mobilize resources for industrial-
ization. This worked quite well. With time, state power over these large
firms weakened. Roh and Kim Young Sam were less autocratic and the
chaebol became increasingly more powerful than the state bureaucracy
that had previously overseen them. This was a contributing factor in the
economic crisis. Kim came into office with a strong public mandate to
overhaul corporate practices and he tried to do so. Luckily, the economy
rebounded fairly well from the initial financial crisis. In 1998 there was
a contraction of 5.4 percent, and this bounced to 9.3 percent growth
in 1999; unemployment similarly improved from 8.6 percent in
February of 1999 to 4.8 percent in September 1999.28 Under these pos-
itive conditions Kim set about trying to restructure and reform the chaebol.
Perhaps one of the more successful example of this is the government’s
presiding over the restructuring of Daewoo. Kim also launched a series
of investigations into “unfair internal transactions of financial relations
between chaebol units.” One of the (many) problems with the chaebol
had been accounting slights-of-hand, where profitable units within the
conglomerate covered up for or transferred money to the unprofitable
units.29
Kim also worked to implement political reforms, but here he was not
terribly successful. One of his few successes was an agreement to change
electoral and representation arrangements. The single-seat system with
winner-take-all elections was replaced by a multiple-seat system where
two–four legislators would be elected from each (now larger) district.
Some seats would now be decided in party slates, some by candidate
72 ● Political Change and Consolidation

races, and some by proportional representation. The goal was to end


regionalism.30 Kim also pledged during the election to push for a systemic
change from a presidential system to a cabinet system with a strong
prime minister.31 Although DJ had won the election, he had done so
with only a narrow margin of victory and he did not have a strong power
base from which to enact reforms or his favored policies. Additionally,
Kim promptly suffered from charges of corruption, which weakened the
moral strength of his government.32 DJ was forced to postpone his
systemic changes until after the parliamentary elections in 2000. Given
his party’s small number of seats in the legislature, he was unable to get
enough support to revise the constitution and hoped to win more seats
in the National Assembly to be able to change the constitution.
National Assembly elections took place on April 13, 2000. They were
held under the new voting rules and turnout was quite low. The GNP
won 39 percent, DJ’s renamed party, the Millennium Democracy Party
(MDP), won 35.9 percent, and the ULD captured 9.8 percent. It was a
very disappointing outcome for DJ. MDP’s 115 seats out of 273, com-
bined with the ULD’s 17 seats, would still leave him short of a majority.
That meant that further significant reforms were unlikely. Instead, the
MDP/ULD relationship worsened and despite changes to the electoral
system, regionalism still seemed powerfully important in determining
election results.33 The bright spot for Kim was his winning of the Nobel
Peace Prize and continued support for his Sunshine Policy of engagement
with the North. Kim suffered a loss of public approval with continued
scandals such as the Hanvit Bank scandal34 and other charges of finan-
cial misconduct of high-ranking officials. Financial reforms were slow in
coming, but economic growth continued to be strong. Despite the
promising economic data, the public mood was gloomy in 2000, people
had high expectations of Kim’s government, both in terms of improving
“good government,” that is, political reforms, and economic perfor-
mance, and better relations with the North. What seemed foremost on
people’s minds were the continued charges of corruption and a lack of
large-scale political reforms. People’s disappointment and frustration
continued to grow as economic reforms lagged in 2001.
Political infighting resulted in fewer political reforms than the public
expected. Political battles were waged between the ruling and the
opposition parties; the parties took different positions vis à vis chaebol
reform. The GNP sided with the conglomerates against reform, objecting
to controls such as limits on investment, the establishment of holding
companies, and limits on debt-to-capital ratio of 200 percent.35 In 2001
there was a breakdown within the coalition of ruling parties, furthering
South Korea ● 73

strengthening the GNP. 36 Kim was further put on the defensive when
his administration decided to investigate tax evasion by the media.
Twenty-three newspapers were investigated. Critics saw this as intimida-
tion and harassment of the press, especially harassment of those critical
of the government.37
With the economy faltering somewhat and losses in three by-elections
(two in Seoul, generally a New Millennium Democracy Party [NMDP]
stronghold, and one in Kwangwon) there was discussion within the party
about the need for reshuffling and image building. On November 7,
2001, DJ announced he was resigning as head of the NMDP. He argued
that this move would help him focus better on economic and policy
management since now he would be free of partisan loyalties.38

The 2002 Election


South Korean politics in 2002 revolved around the presidential election
scheduled for December 19, 2002. The campaign was extremely dirty on
both sides. Charges and countercharges of corruption were made by all
parties. Since DJ could not run, and since he had resigned from the
party, the field was open for the party to choose a candidate. The party,
again called the MDP, held the first ever party primary to let its members
choose a candidate. Roh Moo-hyun won and enjoyed overwhelming
popularity for a while. In 2002 Roh was fifty-six years old. A human
rights lawyer with no formal college education and a humble back-
ground, he ran as a very progressive candidate.39 By the summer of 2002
Roh’s support had begun to wane. He was tainted by the scandals
surrounding DJ and his sons, and he miscalculated the public’s reaction
to a visit to Kim Young Sam.40 The approval ratings of Lee Hoi Chang,
again the candidate from the GNP, increased. The anti-Roh faction
within the MDP began to think about an alternative candidate. They
turned to Chung Mong Jun, a moderate politician who had gained pop-
ularity because of his association with Korean World Cup soccer. Chung
had formed his own party, the People’s Unity of the Twenty-First
Century, and was looking promisingly popular. Some in the MDP
wanted to bring Chung in to replace Roh as the party’s candidate.41 Roh
and Chung agreed not to run against each other and split the vote, thus
allowing Lee to win. They agreed to an unusual way of deciding who
would run. They decided to hold a TV debate and whoever scored higher
in public opinion surveys afterward would run. Roh won the debate by
a small margin of 46.8 percent to 42.2 percent.42 Roh then went on to
defeat Lee in the national election by an even smaller percentage of the
74 ● Political Change and Consolidation

vote, 48.9 percent to Lee’s 46.6 percent.43 Many celebrated Roh’s victory
as a shift in class politics in South Korea. He was the first president
elected from a poor background. However, regionalism was alive and
well and helped determine the election’s outcome. Roh and his supporters
hoped that his victory would signal an end to the old system of money
politics and factionalism. However, Roh turned out to be a weak leader.
Politics become more polarized between conservatives and progressives,
there was an increasing number of labor strikes and organized protests.44
Roh’s inner circle was largely inexperienced in administration and he was
unsuccessful in overcoming clashes with the conservative-controlled
National Assembly.
Strikes and protests became more militant and police reacted with
Molotov cocktails and arrests. The MDP was increasingly factionalized
and finally Roh and thirty-five other members left and formed a new
party, Open Our Party (URI), along with five defectors from the GNP.
Still politics did not settle down. Finally, in the fall of 2003 Roh
announced he would seek approval to stay in office. The National
Assembly voted against Roh and charged that he had violated electoral
laws. The GNP, the opposition party, controlled the legislature and they
alleged that Roh had violated election law by supporting URI candidates
and by not staying neutral. Also, the GNP argued that the president
should be impeached for his involvement in illegal campaign funding by
his aides.45 For two months he was a lame duck, unable to govern. In the
April 2004 elections, the URI won a slim but outright majority in the
National Assembly; however, it subsequently lost its majority after a
handful of URI assembly members were forced out of their seats by a
combination of political infighting and election fund-raising scandals.
The Constitutional Court reinstated the impeached president and
overturned the earlier vote on possible election violations.46
Significant by-elections were held on April 30, 2005, and the Uri
Party was unable to do well. The GNP won five out of six contested
National Assembly seats. This was a terrible blow to President Roh and
his party. Already weakened by the five legislators who had to resign for
electoral law violations, the GNP as of 2005 has one hundred and
twenty-five seats in the legislature, enough to block Uri from having a
majority. There thus seems little likelihood of continued political
reforms such as the elimination of the controversial National Security
Law, which Roh had wanted to do away with.47 While the inability of
Roh and his party to enact further political reforms is unfortunate and
does not bode well for strengthening democracy, one can see signs that
voters are holding representatives accountable for their actions and not
South Korea ● 75

supporting the sort of corrupt practices (violating electoral or financial


laws) that used to be common practice. This certainly is a positive sign
for the strengthening of democracy and democratic values. How then
should we understand the consolidation of democracy in South Korea
since 1997?

Explanation for Mixed Results


I would argue that South Korea is a viable, strong democracy, but an
imperfect one. Opportunities for further political reforms seem to come
about when there are unique circumstances present. Pressures from
within government, from society, and from external forces need to align
to produce significant changes. In the 1997 economic crisis, these
elements coalesced; Kim was elected and the long-standing power of the
GNP was challenged. This opened the door to reforms that improved
accountability and transparency but it did not totally solve these problems
and corruption and divided government meant that democracy was not
further consolidated. Why not? The reasons have to do with the same
elements or variables that helped explain the political reforms of
1997–1998. Since 1997, internal and external pressures for democracy
have changed; priorities, concerns, and goals are different than they were
during the economic crisis and this has affected the momentum for
democratic consolidation.
In 1997 mass mobilization and protests were triggered by the economic
crisis. People were outraged at Kim Young Sam and his administration
for Korea’s economic mess. They took to the streets to express their
frustration with the government and with the political system itself. This
politicization is one part of the explanation for DJ’s victory. Kim, an
activist, had not previously been successful in his electoral campaigns;
the economic crisis made people more critical of conservative elites who
had based their legitimacy on Korea’s economic development. Also, the
need to broaden his electoral base forced the alliance with Kim Jong Pil,
which may have been his most crucial decision. This both widened his
regional appeal, and it may have reassured some voters that his more leftist
or progressive policies would be kept in check. External pressure from
the IMF helped DJ enact some political reforms to weaken the power of
the chaebol and their conservative allies in government, and by
ultimately supporting the IMF program just prior to the election, Kim
again could project an image of moderation to voters.
From 1997 until now, these pressures have changed. Fortunately,
South Korea’s economy rebounded fairly well from the economic crisis.
76 ● Political Change and Consolidation

The nation graduated from the IMF’s oversight, thus economic incentives
for political reforms, particularly those that aimed to reform the chaebol
and money politics, were weakened. (More about the chaebol will be
discussed shortly.) Internal dynamics among political elites have also
changed. DJ in 1997 was seen as a credible force for democratization. He
was a longtime democracy activist and was seen as outside of the old
clique of leaders associated both with the authoritarian order and with
corrupt political practices. However, Kim too suffered from scandals
involving his sons and close associates. Hence, his power as an advocate
of change weakened over time. Roh too seemed to take office with the
promise of belonging to a new breed of leaders, unconnected to old ways
of politicking. However, he has clearly been hobbled by his own and his
party’s shortcomings. This may be the paradox of attempts at democratic
consolidation in Korea. While too strong an executive could be a
problem for democracy (no checks and balances), too weak an executive
means that reforms may not take place. The latter seems to be the case in
Korea.

Further Explanations: Demographic Factors


There is a growing body of literature about public opinion and political
attitudes in South Korea. Doh Shin’s work is one of the most frequently
noted about democratic attitudes and values. Shin quotes the New York
Times reporter Nicholas Kristoff:

In many ways it [Korea] is a democratic society, and it yearns for interna-


tional recognition as an open and advanced country. Yet the democratic
filaments are intertwined with autocratic ones to make a social fabric that
is sometimes baffling to outsiders.48

Shin’s survey research found that 91 percent of Koreans favor democ-


racy on some level, but many respondents also favor strong leadership or
limited autocracy. Under particular conditions, 53 percent of respon-
dents chose authoritarian leadership over mass-based participatory
democracy.49 Additionally, when questions about democracy are asked
over time (Shin’s survey work covers the time Kim Young Sam was in
office), it seems that Koreans’ support of democracy is superficial, frag-
mented, and mixed with authoritarian habits. From 1993 to 1997 favor-
able attitudes about democracy fell.50 These seemingly contradictory
findings are not as surprising as they first seem. It is conceivable that
citizens who have lived most of their lives under a nondemocratic
South Korea ● 77

political system may support the ideals of democracy but then fail to
support their new democratic regimes when they fall short on those
ideals, or when they are not able to deliver economic goods as efficiently
as the authoritarian regime did.
Contradictory findings about democratic values could also indicate a
difference in citizens’ understanding or preference of what democracy is
for. It could be that public attitudes about democracy reflect the viewing
of such a political system as an effective means of improving their lives
and/or welfare, instead of seeing it as a system for improving their rights
and role in governance.51 If the former is the case, then the economic
crisis and later employment problems would certainly call into question
the value and appropriateness of democracy. However, the economic
crisis did serve to enhance democracy; hence, this might seem to indicate
that South Koreans view their political system as a mechanism for both
ensuring social well-being and protecting rights, with a preference for
economic concerns over civil rights. These conflicting attitudes about
democracy could well help explain why it has proven so difficult to fully
consolidate democracy in Korea.

Changes in Security Relations and in Relations


with the United States
In much of the literature on South Korean politics, there is a great deal
of space devoted to discussing security issues with North Korea, and
South Korea’s special relationship with the United States.52 The divided
Korean peninsula is a product of the Cold War and much of the legiti-
macy and even success (economic and political success) of the authori-
tarian regime from 1950 to 1987 stems from U.S. support for South
Korea as the front line of defense against encroaching communism from
the North. As was true of other regimes around the world, the United
States was willing to overlook human rights abuses and a lack of democracy
in South Korea when it was a U.S. ally against the communist North and
against China and the Soviet Union. South Korean military leaders, in
turn, used the hostilities and the threat from the North as a reason to
promote economic growth and to clamp down on any dissent or agitation
for democracy at home. As the Cold War began to wind down in the late
1980s, and as the United States began to reexamine its friendships with
repressive (but anticommunist) regimes, South Korean military leaders
lost some of their justification for hard-line rule.
DJ’s Sunshine Policy of engagement with the North would have been
completely unthinkable just ten years earlier. In fact, relations between
78 ● Political Change and Consolidation

South Korea and the North and between South Korea and the United
States have changed dramatically over the last fifteen years. While students
(and to some extent labor forces as well) in South Korea have a history of
skepticism and even hostility toward the country’s relationship with the
United States and to having U.S. troops stationed in the country, military
dictators saw the United States as a staunch ally and supporter. Relations
with the United States began to change under DJ. Kim’s relaxed and
engagement-seeking policy toward the North came at a time when the
United States was trying to decide how to deal with the possibility of a
nuclear North Korea. Engagement was politically unpalatable to many
in the U.S. Congress (as it is now), so Washington sometimes has issued
critical statements about South Korean policy. Additionally, many in
South Korea viewed the IMF as an extension of the United States or at
least as promoting economic interests aligned with the United States.
Thus, anger at the IMF was also manifest as anti-U.S. sentiment.
Despite these fractures in the relationship with the United States, I
think there is an argument worth making that U.S. interests in Korea
helped facilitate (they certainly did not cause) democracy in the late
1980s and during the economic crisis. Also, a change in U.S. foreign
policy goals after 9/11 has perhaps been a small factor in the stalling of
(or the discontinuous nature of ) further democratic reforms thereafter.
As discussed in other chapters, the forces of global capitalism (investors
and multinational corporations) along with the IMF (within which the
United States is the largest contributing member) put pressure on coun-
tries suffering from the 1997 financial crisis to enact certain economic
reforms. While the IMF’s main concern is economic policy making, it is
impossible to divorce fiscal and monetary policies from the larger political
arena. So, pressures to conform to IMF requirements and adjustments
had negative effects on political elites in Thailand, Indonesia, and South
Korea. Leaders in these countries were forced to enact policy reforms
that hurt well-entrenched interests. This had the (perhaps) unintended
consequence of empowering a new set of politicians and democracy was
further facilitated. The United States was delighted to see two of its
interests cojoined, the advancement of liberal capitalism and liberal
politics.
After 9/11 the United States has been focused almost exclusively on
security concerns, both relating to terrorism and to fears of nuclear
weapons proliferation. North Korea poses a serious threat to U.S. inter-
ests as defined by the Bush administration and it was included in Bush’s
famous “Axis of Evil” speech. The North has continued to defy the world
community and refuses to negotiate or fully discuss its nuclear, biological,
South Korea ● 79

and chemical weapons programs. It is clear that North Korea has


weapons of mass destruction, but it is less clear what purpose it intends
these things to serve.53 Under Kim and now under President Roh, the
United States has felt frustrated by a lack of full support in South Korea
for a policy that might use threats (as well as carrots) to get the North to
negotiate the dismantling of nuclear weapons.54 Because the United
States is predominantly concerned with these security issues, it is less
focused on questions of promoting democracy and good governance
within South Korea.

Chaebol Reform
Political reforms and liberalization are deeply connected to the power
and influence of big conglomerates. During periods of successful political
reforms, political elites have been able to enact legislation to curb the
power of the chaebol. When political reforms stall, it seems that chaebol
reassert their dominance. During Korea’s military regimes, the chaebol
were protected and nurtured by their political supporters in power.
Thus, they grew enormously in economic and political power. The first
civilian president, Kim Young Sam, attempted to execute sweeping
reforms of these economic powerhouses to expand democracy to the
marketplace and to weaken the power of money in politics.55 Kim Young
Sam had an ambitious list of goals for reforming the chaebol. If his
agenda had succeeded, the chaebol would have been forced to democratize
internal management (separate ownership from management), promote
fairer competition for small and medium-sized as well as foreign firms,
and limit the number of areas of business that a firm could engage in and
also mutual loan guarantees among chaebol member companies. None
of these policies were successfully implemented. Kim was able to push
through policy requiring real-name accounts in financial transactions,
which was meant to address problems of corruption and hiding of ill-
gotten gains from payoffs.56
DJ was more successful at pushing for chaebol restructuring and
reform, but he still did not fully succeed in weakening their political
clout. Kim was more of an outsider; he did not have the long-standing
ties to the chaebol that might have made him timid to tackle their power.
Also, because of the economic crisis, the IMF’s restructuring requests
put greater pressure on the government to take action against the chaebol.

On January 13, 1998, President-elect Kim went to the chairmen of four of


the largest chaebols—Hyundai, Samsung, LG, and SK to agree to 1) provide
80 ● Political Change and Consolidation

consolidated corporate balance sheets for each chaebol by 1999, as a


means to improve transparency in management; 2) eliminate cross-
investments and payment guarantees among chaebol member firms;
3) reduce the high debt/equity ratio of corporations; 4) specialize into a
small number of key sectors; and 5) strengthen the responsibility of the
CEOs and upper management.57

With the economy in shambles, chaebol owners were no longer able to


claim state favors, protection, or patronage. Without the reform of these
enterprises, IMF assistance would not have been forthcoming. Likewise,
the rating of creditworthiness from private capital markets (the power of
global capitalism at work) would have sunk even lower and made it
impossible for the chaebol to continue to borrow money and function.
DJ, as an outsider and with a reputation initially as clean and not corrupt,
could exact these changes on the private sector. As his tenure in office
progressed and as scandals about his family and associates came to light,
his power and credibility waned. Hence, Kim was moderately successful
at promoting reforms and democratization. Kim was, and Roh is today,
confronted with conditions that are less conducive to pushing through
serious political or economic reforms to further democratization. The
United States, despite talking a great deal about the importance of
democracy, is really more preoccupied with security problems. So, the
United States is more interested in what South Korea can do for it as a
partner in affecting change or at least more negotiation on nuclear
weapons development in North Korea. Also, because the 1997 crisis has
long since subsided and the economy rebounded a bit, there is less pressure
on the chaebol to change their way of doing business and their ties to
political leaders. Finally, groups in civil society and democracy advocates
may feel a bit frustrated. Both DJ and Roh Moo-hyun came into office
full of promises for a new era of change. Instead, both found themselves
mired in similar scandals and charges of nepotism or corruption that
their less democratically minded predecessors faced.

Conclusion
It is interesting that South Korea, Indonesia, and Thailand, despite having
different political systems and different levels of political openness, all
underwent political reforms in the aftermath of the economic crisis. Of
these three countries, South Korea in 1997 was already fairly democratic.
There were regular, free, and competitive elections in South Korea
beginning in the late 1980s. The media was already free and able to
South Korea ● 81

report and criticize without fear of repression or being shut down.


People and organized groups were able to protest and assert their views.
Despite these open conditions, an opposition candidate had yet to win
the presidency until DJ did so in 1997. Also, the power of money and
the chaebol in policy making and in electoral campaigns prevented
a truly level playing field from existing. The economic crisis played a
similar role in South Korea as it did in Indonesia and Thailand: it pro-
vided additional incentives and power to opposition groups to chip away
at the old order. In South Korea this happened through peaceful protests
and electoral victory for the opposition. DJ’s victory and the election of
Roh after him have indicated that citizens want to see outsiders elected
and want reforms to go through. However, Kim and Roh were hampered
by the continued election of representatives to the legislature who
resisted more significant changes to the system. Perhaps then Koreans
are concerned about too much change, too quickly, or do not want to see
more policies enacted that could economically injure big business and
risk the destruction of more jobs.
Today, South Korea is arguably more democratic than it was in 1997,
especially if measured by procedural and good governance standards.
However, several reforms can still be made. Laws and procedures can be
put into place to institutionalize stricter oversight of politicians, their
allies, and the chaebol.58 The political system can be reformed to reduce
the power of money in campaigns, as well as to encourage more clean
and honest politicians to run for office. Once these changes are made
democracy will be more fully practiced.
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CHAPTER 3

Indonesia: Democratization but


Hurdles Still Remain

Introduction
In Indonesia the economic crisis helped push President Suharto out of
office after more than thirty years in power. Since the spring of 1998
when Suharto stepped down, Indonesia has undergone massive political
change. The country is now on its fourth post-Suharto president, the
constitution has been changed, new political parties have been born, the
military’s role in politics has shrunk, and local governments have been
given new control and authority. Yet, democracy still faces serious hur-
dles. Given that the economic crisis helped bring about political reform
in 1997/98, what has happened since the crisis abated? Have changes
been institutionalized or consolidated, why or why not? In order to
answer these questions, the chapter looks at several factors that impact
political change: the role of external pressures (from either the IMF or
globalization more generally, as well as pressure from U.S. policies to
combat terrorism), internal pressures from civil society, the military, and
elite cooperation or alliances (i.e., political cooperation or disagreement
among top politicians).
Democracy has only been weakly consolidated in Indonesia although
reformasi (political reform) has been far-reaching and significant. Why
has the democratic potential not been fulfilled? The answers are
complex: to begin, external pressures have changed. In 1997/98 the IMF
and global investors supported political changes so that there would
be greater accountability and transparency to protect their assets.
Indonesia, like Thailand and South Korea, has graduated out of its IMF
program and now there is greater pressure for stability and for rooting
84 ● Political Change and Consolidation

out terrorism. The IMF no longer has billions of dollars at stake and
political reform and accountability are secondary to more significant
security goals. Likewise, internal pressure for democracy has weakened:
civil society has focused more on welfare or economic concerns than on
political changes, and while the military seemed to support political
change in 1998, and although the military’s formal role in politics has
shifted in South Korea, Thailand, and Indonesia, it is still a powerful actor
in the political process and may be an impediment to the consolidation of
democracy in Thailand and Indonesia. The danger in only having weakly
consolidated democracy is that in Indonesia, unlike in Thailand or South
Korea, it is not unreasonable to envision a return to a less democratic
order. It is unlikely that the country would revert back to hard-line author-
itarianism, but it seems possible that conditions could occur where some
of the democratic political changes that have occurred are overturned.

Background: Indonesian Politics


Before 1997
President Suharto came to power in Indonesia in the wake of a murky
coup in 1965. The exact circumstances surrounding the failed coup
d’état of September 30, 1965, remain controversial and unclear. The
official and mostly accepted account is that pro-communist military
officers, going by the moniker the September 30 Movement (Gestapu),1
attempted to take power. They seized the state radio station on October 1,
1965, and announced that they had formed the Revolutionary Council
and a cabinet in order to prevent a coup by corrupt generals who were
supposedly in the pay of the United States’ CIA. Gestapu generals mur-
dered six generals on the night of September 30. Although various
Communist Party (PKI) officials offered support of the action, it is
unclear what the party’s real involvement in the coup was. Official mili-
tary accounts of the coup give the communists credit for masterminding
the event, but some scholars have suggested the PKI’s role was minimal
and that the coup was the result of military rivalries or factionalism.2
The aftermath of the coup, however, is tragically clear. There was a
violent anticommunist reaction. By December 1965 mobs were engaged
in massive killings. Targets were members, supporters or possible sympa-
thizers of the PKI, and ethnic Chinese. Estimates of those killed vary
from a low of seventy-eight thousand to two million, a figure around
three hundred thousand is most likely. The army was also purged of pro-
communist and pro-Sukarno (the first postindependence leader of
Indonesia) elements. By the mid-1960s Sukarno’s politics had become
Indonesia ● 85

more leftist and he was less able to play one powerful group off of the
others. Sukarno’s power collapsed because of his leftist sympathies and
because of his loss of military support. In his place General Suharto rose
to a position of supreme power.

Suharto’s New Order


Over time, Suharto created an authoritarian regime characterized by
tightly centralized control and personal rule. He gradually asserted control
over the military (ABRI) and gave the army generous resources, personnel,
and equipment. The armed forces played important roles in maintaining
social order and in political life. This “dual function” or “dwifungsi”
made ABRI the main source of power in Indonesia. ABRI also became
further entrenched in the economy.
Although opposition to Suharto existed, the regime was largely stable.
The explanation for this can be found in the military’s loyalty to Suharto
and its political and administrative powers. Additionally, Suharto created
organizations to link society to the regime. For example, Golkar, Suharto’s
network to mobilize peoples’ support and the vehicle he used to win
elections, existed at every level of society. He also rejuvenated Pancasila
as the official state ideology. Pancasila is the basis for a unified state
under the adherence of the following five principles: belief in God,
humanitarianism, national unity, democracy, and social justice.
Like his predecessor, Suharto marginalized political parties. Only
three parties were allowed to compete in elections: four Islamic parties
were forced to merge into the Unity Development Party (PPP); non-
Islamic parties, such as the Indonesian Nationalist Party (PNI), were
fused together as the Indonesian Democratic Party (PDI); and most
significantly, there was the party formed by the armed forces, the Joint
Secretariat of Functional Groups (Golkar). This was a way of co-opting
social organizations and bureaucrats and making them subservient to the
military. Golkar was given primacy in rallying popular support for
Suharto. Overall party influence was also minimized by restricting the
parties’ roles in the newly established legislative bodies, the DPR (lower
house; Dewan Perwakilan Rakyat), and the MPR (upper house; Majelis
Permusyawaratan Rakyat). About 20 percent of members at all levels of
government were directly appointed.
Suharto also embarked on economic development. Under the guidance
of an informal group known as the Inter-Governmental Group on
Indonesia (IGGI), it was comprised of major Western nations, Japan,
and multilateral aid agencies such as the World Bank. Aid and lending
86 ● Political Change and Consolidation

programs were coordinated to address the country’s debt service


obligations. Under the guidance of the IGGI, a group of foreign-educated
technocrats (sometimes called the Berkeley mafia) designed a series of
five-year economic programs named Replita. By most standards,
Indonesia was successful. The quadrupling of oil prices in the 1970s
helped Suharto buy political stability and allowed him to embark on new
avenues of industrialization. Also, the introduction of high-yield
varieties of rice allowed the nation to become self-sufficient in this
basic crop.
Not to be dependent on oil, Suharto also promoted manufacturing,
investing in steel production, and semi-processed goods such as plywood
and other forest products. Economic development was not along a
laissez-faire model. Instead, Suharto built an economic system based on
bureaucratic (and military) control over economic entities. Powerful
public figures, both military and civilian, gained control of potentially
lucrative offices and used them to build economic powerhouses. In part
the socialist legacy of the independence struggle made such state inter-
ference in the economy possible. Chinese entrepreneurs and members of
Suharto’s family were often the beneficiaries of government contracts
and licenses that created monopolies in key industries.3

Immediate Effects of the Economic Crisis


The economic crisis in Indonesia unleashed a torrent of protests and
resentment toward President Suharto’s almost thirty years of autocratic
rule. Throughout the summer of 1997 Indonesia tried to cope with the
falling rupiah on its own. Suharto and his closest allies were unable to
decide if they wanted to accept the terms offered by the IMF for
assistance in stopping the economy’s free fall. Finally, in November of
1997, in an effort to calm domestic and international fears of inaction,
Suharto’s government closed sixteen insolvent banks and announced
additional austerity measures. Instead of increasing confidence in those
financial institutions that were sound, financial panic occurred and mass
demonstrations erupted across the archipelago. Although it was
announced that US$33 billion in loans would be made available to
Indonesia, Suharto was still unable to agree to terms of a bailout from
the IMF. Finally, in January of 1998 Suharto agreed to a package of
economic prescriptions from the IMF. Some of the requirements
included curbs on official favoritism for companies controlled by his
Indonesia ● 87

children and his nearest allies, and reductions in subsidies, such as those
for oil and gas.
In January 1998 Suharto announced that he would seek reelection; it
would be his seventh term as president of Indonesia. He also hinted that
he would choose B.J. Habibie as his next vice president. Suharto’s
actions only served to further weaken investor confidence about reforms
in Indonesia’s economy, and public disapproval over how Suharto
was handling the economic crisis grew alarmingly. Mass demonstrations
increased throughout Indonesia in early 1998. On February 14, a different
sort of activism occurred. While most protests and demonstrations had
been peaceful, a different segment of society used the unrest to further
their sense of anger and resentment toward perceived beneficiaries of the
New Order. Rioters in Jakarta, Medan, and other cities burned and
looted shops. Churches were vandalized and burnt. Protests continued
in major cities during February; some protests, such as those by students,
were peaceful and mostly about political aims whereas others were violent.
Although police sometimes tried to break up the demonstrations and
riots, often police and military units stood by while protestors destroyed
private property and even attacked other people, mostly ethnic Chinese.
On March 10, 1998, Suharto was reelected by the legislature and was
given significant new power to confront the economic crisis. His
reelection triggered some of the largest and most fiery antigovernment
demonstrations in thirty years. Protests continued into the spring.4
May began with violent riots in Medan and other cities over price
increases resulting from reductions in government subsidies for cooking
oil and other necessities. Thousands of students continued protesting
against the regime. Some very notable and high-profile individuals
began calling for Suharto to step down. Muslim leader Abdurrahman
Wahid called for Suharto’s resignation and he pled with the nation to put
an end to the hostility toward the Chinese community. Wahid’s outspo-
kenness against the government gave encouragement to the students to
continue their protests and to take them outside the campus gates to the
streets.
On May 13, 1998, Jakarta police opened fire on thousands of student
protestors at Trisakti University. Six were killed and dozens wounded.
The next day protests turned horrifically violent. Hundreds of stores,
vehicles, offices, and homes were burned and looted. Most of the anger
and damage was directed at Indonesia’s ethnic Chinese minority because
of their perceived business ties with Suharto.
88 ● Political Change and Consolidation

Hundreds of Chinese women and girls told gruesome stories of being


assaulted, raped, and tortured. Graphic tales of the violence have been
widely documented.5
When Suharto resigned the presidency on May 21, 1998, B.J. Habibie
took over. Habibie served as president for a year and allowed competitive
elections to be held.
While Suharto’s ouster from office is clearly the turning point in
Indonesian politics, there is still a legacy of problems left behind that
both set the scene for immediate political reforms from 1998 until 2004,
and still need addressing today. Three broad legacies of this past have
continued to impact the country’s politics and its basic stability.

1. Bureaucratic capitalism: A lasting effect of both the colonial political


economy and Suharto’s New Order is the power of the state in the
economy. Large corporations with cozy ties to individuals in the
government or the military continue to dominate key industries.
2. Territorial integrity: The desire to build a unitary state whose terri-
tory would extend from Sabang, an island northwest of Sumatra,
to Merauke, a town in southeastern Irian Jaya (now called Papua),
has been critical to the creation of nationalism for successive
regimes. The current president, Susilo Bambang Yudhoyono
(popularly known as SBY), will face continued challenges to this
desire.
3. Politicized Islam: Reformist and conservative Islamic groups have
competed for power and influence in Indonesia since colonialism.
These competing faces of Islam, along with more violent Muslim
organizations, will continue to vie for power and popular support.

These elements will be discussed later in the chapter.

Reformasi
The balloting held on June 7, 1999 was the most free and fair election
since the 1950s. Of the forty-eight parties competing, Megawati
Sukarnoputi’s. PDI-P won the longest share of votes with 34 percent.
Golkar, taking advantage of comprehensive local networks, won 20 percent
of the vote. Abdurrahman Wahid’s party PKB, and Amien Rais’ PAN also
had strong support. The President was chosen through an electoral-college
structure in October 1999. Although Megawati’s PDI-P won the highest
percentage of votes, she failed to gain the backing of other political elites
and at the very last moment Wahid was selected to be the president.6,7
Indonesia ● 89

Although he was a vocal supporter of reformasi, that is, political


reforms, his administration was quickly beset with problems and he
was viewed as unreliable and inconsistent. On July 23, 2001, he was
impeached by the Congress.8 Megawati (Mega) succeed him as the third
leader in three years to try to govern Indonesia. While none of the first
three post-Suharto presidents lasted long in office or seemed strong
enough to pull the economy out of the doldrums (although under Mega
the economy was at least stable), significant political changes did take
place and the parliamentary and presidential elections of 2004 were the
most open, competitive, and clean elections in Indonesia’s modern history.

Further Changes
From 1998 until 2004 there were numerous important changes to the
political system. The government that took office on October 20, 2004,
is more representative of the peoples’ wishes than ever before. The capstone
of reformasi was a constitutional amendment that called for the direct
election of the president (for a five-year term). Prior to 1998 the 1945
constitution stipulated the election of a national parliament, the DPR,
made up of party representatives and elected every five years. It is a
unicameral body. The DPR, along with a group of regional representa-
tives, the military, and other “functional groups,” formed the People’s
Consultative Assembly, the MPR, the most significant function of which
was to choose the nation’s president. The president appointed a cabinet
and was able to rule largely by decree. Suharto manipulated the parties
that “competed” in the DPR elections between 1977 and 1997 and con-
trolled the appointment of the other representatives who sat in the
MPR. The DPR served as a mostly rubber-stamp body for Suharto’s leg-
islation and the MPR reelected him to the presidency every five years.
In addition to initiating direct election of the president and vice pres-
ident, constitutional amendments adopted after 1998 have eliminated
the “functional” representatives in the MPR and replaced them with a
senate made up of 128 directly elected, nonpartisan members, 4 from
each of the nation’s 32 provinces.9 The MPR is now comprised of the
DPR and the senate together and its only real powers are to amend the
constitution, swear in the president and vice president, and to dismiss
them under very specific conditions. A constitutional court has also been
created to review laws and resolve disputed results of general elections
and to help protect human rights.10
After 1998 new political parties were also allowed to be formed (and
reformed). Suharto’s election vehicle, Golkar, continues to operate and to
90 ● Political Change and Consolidation

be highly successful at the polls and in winning local elections, which


began in June 2005. The strength of its networks allowed it to finish in
second place in the 1999 election and to win the most votes in the 2004
parliamentary elections.11 Other strong parties include PDI-P (a reconsti-
tuted nationalist party), Megawati’s party, but it had a poor showing in
the April 5, 2004, elections (they won less than 20 percent of the popu-
lar vote, down from 34 percent in 1999). The secular, progressive
Democratic Party (PD) of which SBY is the head, and Keadilan
Sejahtera, the Prosperous Justice party (PKS), an urban-based Islamic
party that advocates clean government, were the beneficiaries of PDI-P
losses at the polls. Important players among the smaller parties include
Parti Bulan Bintang (PBB, Crescent Star Party), the PAN, and the PKB.12

Elections of 2004
The year 2004 was a watershed one for Indonesia. Parliamentary
elections were held in the spring, and the first-ever direct presidential
election was held in two rounds. The initial balloting was in July and a
run-off between the two highest vote getters was held in September. The
national election on April 5 for the legislative branch showed how suc-
cessful the reformasi has been. With all the power of incumbency,
President Megawati’s party, PDI-P, suffered major losses, illustrating
voters’ dissatisfaction with her time in office. As mentioned earlier, PDI-P
won less than 20 percent of the popular vote, down from 34 percent in
1999. Golkar’s share of votes also shrank, although in absolute terms it
won the largest block of votes. Parties that did well included the PD led
by former general SBY and the PKS. Other moderate Islamic parties also
did well, but parties advocating Islamic law and an Islamic state did not
do well.

Five of the eight parties that captured more than two percent of the vote
in April were Islamic parties, but all of them had moderate leaders and
platforms. Four of the five tickets that competed in the July 5 election
included a moderate Muslim candidate, and yet a third of the voters
picked the entirely secular ticket headed by SBY.13

On July 5 the first round of the presidential election was held. Based
on the results of the parliamentary elections it was a five-way race for
president and vice president. Since none received a plurality of votes, a
runoff was scheduled for September 20. The two top vote getters were
SBY with 34 percent of the vote and Megawati with 27 percent and so
Indonesia ● 91

they faced each other in September for a final vote.14 The final vote on
September 20, 2004, resulted in a resounding victory for SBY. The former
general won 60.6 percent of the 110 million votes, about 20 percent
more of the popular vote than Megawati received.15 SBY’s popularity has
meant that many legislators, irrespective of party affiliation, have been
willing to work with him. Given the disarray and factionalism within
both Golkar (and since SBY’s vice president Kalla captured the Golkar
leadership in December 2004) and PDI-P, SBY has little coherent oppo-
sition in parliament. Rates of voter turnout were impressive for all three
rounds of elections in 2004; the highest participation came in the July
presidential race where about 82 percent of voters (125–126 million)
cast their ballot.16 Understandably, voter fatigue caused turnout to
decline from April to September.
The 2004 elections were significant for Indonesia for several reasons.
Most importantly, they were carried out by and large without violence or
massive fraud, and were open, free, fair, and contested by a multitude of
parties and candidates. Second, they showed that reform can happen and
have significant effects on the political system. Third, voters signaled
that they care mostly about bread-and-butter issues such as the state of
the economy and social welfare issues,17 but that there is growing concern
about security problems and violence (the bombings in Bali and Jakarta
and the sectarian violence elsewhere) as they could disrupt goals of
economic growth, or even undermine democracy and stability.
The elections also highlighted how far political reforms have come in
areas beyond just transforming political institutions. Two of the areas
where one sees dramatic positive change (although not without some
problems) are in the independence and variety within the media and in
the explosion of NGO or civil society activity. After the fall of Suharto,
Indonesia was viewed as the center of media freedom in the region.
There are a wide variety of media outlets and opinions. The amount of
critical reporting and commentary that exists would have been impossible
under Suharto. However, these freedoms may be shrinking. Indonesia’s
media is increasingly subjected to lawsuits and restrictions (such as in
Aceh), and physical assaults on reporters have been documented. This
violence seems to have been sponsored by powerful officials and busi-
nessmen with political backing. Private business interests and the military
are increasingly using the civil court system to control press coverage.
Tempo’s chief editor Bambang Harymurti was sentenced to one year in
prison for an article that alleged one of Indonesia’s most powerful busi-
nessmen, Tommy Wintata, stood to profit from a fire that had destroyed
part of a textile market. The same article included a statement from
92 ● Political Change and Consolidation

Tommy Wintata denying the allegation. Bambang Harymurti is free


pending appeal. Cases such as these, plus the censored coverage of the
war and the peace deal in Aceh, exemplify reemerging practices of polit-
ical pressure on editors, intimidation of journalists, and self-censorship.18
The media itself is also going through a learning process. Sensational
coverage that sells papers or generates advertising revenue and outlets
seeking pay for coverage can distort what is reported. Also, journalistic
ethics are still developing.
There are many effective human rights groups, including Imparsial,
Humanika, and the Indonesian Legal Aid Foundation, and ELSAM
(Lembaga Studi dan Advokasi Masyarakat, a Jakarta-based research insti-
tute and human rights advocacy group), that aid victims and promote
civil rights. There has also been enormous growth in think tanks and
foundations that exist to study various political, economic, or social
issues and then to put pressure on the government to implement partic-
ular policies. These groups are legal but the government has been known
to monitor, harass, and interfere with their work. The State Intelligence
Agency (BIN) accused twenty local and international NGOs of endan-
gering national security in the period leading up to the July elections.
The national police then said that they were monitoring Indonesian and
foreign activists identified by BIN as possible threats.19 Clearly, this is
less about national security than about protecting officials whose records
might be embarrassing when exposed by critics. This is a troubling sign
since these tactics were commonly used during Suharto’s New Order.20
The other highly significant shift in Indonesian politics is the formal
removal of the military from political affairs. Scholars disagree on how
significant a force in politics the military might still be. The Indonesian
National military (TNI or Tentara Nasional Indonesia, formerly ABRI)
once played a pivotal role in politics. The formal process of de-linking
the military’s civilian and political functions began almost as soon as
Suharto was out of office. Several of the reforms were immediately suc-
cessful: the police were separated from the armed forces, formal ties to
Golkar were severed, the number of seats in parliament reserved for the
military were reduced (and are now gone), and the military was ordered
to stay neutral in elections.21 More informally, and perhaps more signif-
icantly, President Wahid tried to limit TNI’s power, and the most obvi-
ous example of this was his removal of General Wiranto from his cabinet
position; however, five generals still served in the cabinet (one of whom
was SBY, who recognized early that changing economic, social, and
political dynamics would change TNI’s position and power) showing the
continued political influence of TNI.22 From 1998 when Suharto left
Indonesia ● 93

office through the spring of 2004, both Presidents Wahid and Megawati
talked about curtailing the military’s role in politics but it seemed that
TNI was able to retain power both behind the scenes and through insti-
tutional means.
One of the consequences of Gus Dur’s attempts to weaken the military’s
grip on power was the creation of greater factionalism among top leaders.
When General Wiranto was clearly calling the shots, there were few officers
in the military who would openly challenge him. Once he was removed,
other generals still held powerful positions in government but there was
less of a united block of military players pushing for a coherent set of
policy choices.
Nonetheless, by 2003–2004 TNI still carried a great deal of influence
on the political processes and policy decisions. However, 2004 may be
considered a turning point of sorts for this. While there were several
retired generals who ran for the post of president or vice president, the
military’s representatives in the MPR were are gone and active military
personnel were ordered to remain neutral in the elections, even to the
point of forgoing their right to vote. Likewise, with the 2004 elections,
there are no more appointed members in either the DPR or the MPR.
However, informally, the military is still enormously powerful as retired
officers have joined parties and run for elections. Also, the dense web of
military–business ties has been largely unsevered,23 and the TNI is still
territorially based throughout the archipelago. This, in effect, created a
parallel administrative structure to the government, allowing the army to
act as a type of localized paramilitary police was the means by which the
military’s dual power as a political force could be carried out.24
Perhaps one of the lesser-studied and most troubling elements of
Indonesia’s landscape is the existence of quasi-paramilitary groups with
ties to each of the major parties in parliament. Traditionally, these
groups have been mobilized to instigate popular demonstrations in favor
of the group’s patron, to keep order at party rallies or functions, or to
create a disturbance against opponents. When dissatisfied with elite
political agreements or contests, disputing politicians would mobilize
street protests against opponents and these paramilitary groups were
often part of such actions.25

Other Lingering Problems


Earlier in the chapter, I described three broad legacies of Indonesia’s past
that continue to impact politics and the political economy of the coun-
try today. Those legacies include: bureaucratic capitalism, territorial
integrity, and politicized Islam.
94 ● Political Change and Consolidation

Bureaucratic capitalism, or the state’s involvement in the economy


through guidance and planning or through crony capitalism and
favoritism, is a prime target as the most significant contributing cause of
the financial crisis and of overall distrust in the government. While the
economic crisis and IMF oversight forced Indonesia to begin examining
and getting rid of the worst excesses of this system, the overall economy
remains reliant on the power of well-connected, large business interests,
some controlled by the military or run outright by the state or politically
connected individuals.
Territorial integrity: Of course, the most troubling problem on Indonesia’s
political plate is ethnic and religious violence, carried out in the name of
territorial independence and/or for sectarian claims. For years Aceh has
tried to achieve greater autonomy and now outright independence from
Indonesia. A peace agreement was signed on August 15, 2005, between the
government and the Free Aceh Movement (GAM), which will give Aceh
considerable autonomy although not outright independence. The
Indonesian military has withdrawn a large number of its troops and inter-
national troops have moved in to try to ensure security. There is a risk of
violence from both the Indonesian army, which tends to behave like an
occupying force, and from spoiler elements of GAM who may not have
fully disarmed.26
Other tinderboxes in Indonesia include Dayak–Madurese violence in
West Kalimantan. Deadly clashes occurred in 1999, 2000, and 2001.
Dayaks want to drive the Madurese out of ancestral land, and over the last
few years thousands have been killed and one hundred thousand have fled
their homes. Central authorities and TNI basically stood by and did lit-
tle.27 Christian–Muslim violence has also been intense in the Malukus.

By the beginning of 2002, as many as 10,000 Christians and Muslims had


died and half million were displaced from their homes. Militias were
formed and self-defense was translated into preemptive attack. Entire vil-
lages were burned down.28

The problem is further complicated by police and military person-


nel taking sides, and thousands of Laskar Jihad (a militant Islamic
group) members fighting for their fellow Muslims. Laskar Jihad’s
express aim is to expunge the province of Christianity by killings,
forced conversions, and expulsions. 29 Since 2002, the fighting in
Ambon and around the Malukus has mostly ceased. There have been
sporadic outbursts of violence and bomb attacks, but the clashes are
Indonesia ● 95

shorter in duration and the number of casualties has shrunk from


thousands to handfuls. After the Bali bombing in October of 2002,
Jafar Umar Thalib, leader of Laskar Jihad, perhaps under pressure from
political and military authorities, announced that the group would dis-
band. However, the parent organization for the group, Forum
Komunikasi wal Sunnah wal Jamaah, still operates with offices in
about seventy cities throughout Indonesia, and the organization runs
several businesses and madrassas. 30
Somewhat similar to the problems in Aceh, unhappy Papuans would
like more than the “special autonomy” offered them by President
Megawati in 2002. While Papua (formerly referred to as Irian Jaya) is
not yet as violent as Aceh or Maluku, the training of Muslims for “self-
defense” and the involvement of militias trained by TNI are laying the
groundwork for future violence.31
Politicized Islam: As if these problems were not enough, the government
must also deal with JI.32 The Bali bombing of October 2002, the
Marriott Hotel bombing in August 2003, the bombing at the Australian
Embassy in September 2004, and the second Bali bombing in October
2005 were all carried out by JI.33 While Indonesians (outside of the
Balinese) do not seem terribly up-in-arms about these attacks (secessionist
movements, religious and ethnic violence, and economic issues rank
higher as people’s concerns), the international community, particularly
the United States and Australia, has put significant pressure on the
government to crack down on JI and other avowed terrorist groups. These
legacies will be detailed further when they are placed in the context of
understanding the successes and failures of democratic consolidation.

Analysis of Successful Reforms


Democracy emerged in Indonesia in 1998 because of the confluence of
internal and external factors that collided during the economic crisis.
External variables or factors discussed here are civil society groups and
the IMF. Internal factors include elites (political and business leaders, plus
military generals) within Suharto’s circle of power. People took to the
streets protesting both Suharto’s inability to solve the financial crisis and
the whole political economy that had evolved under the New Order
regime where Suharto’s allies benefited politically, socially, and econom-
ically from their links to him. While students were the most visible and
numerous of the protesters, other groups in society became politicized as
well. Islamic groups and business organizations also called for Suharto to
resign. The IMF played a role as well. It did not explicitly call for
96 ● Political Change and Consolidation

Suharto to step down. The organization claims to be nonpolitical and not


to meddle in domestic politics. However, by accepting IMF loans,
Suharto was forced to enact certain economic policies that were injuri-
ous to his allies, closing banks and ending monopoly control over certain
industries, for example. It seemed that he could do nothing right.34
Policy choices such as reducing fuel subsidies sent protestors into the
streets, and trying to close insolvent banks both angered some of his
closest associates and sent confusing signals to a worried populace.
Instead of assuring the people that the remaining institutions were
sound, he caused them to panic. There were runs on the banks and more
protests. Additionally, he angered some of his closest business, political,
and military allies. Regardless of whether he complied with the IMF or
defied it, people had lost their willingness to let him guide the country
autocratically. I do not believe that protest activity and opposition to
Suharto alone would have ended his regime. But, such politicization
gave additional power and credibility to elites within power to oppose
Suharto. It was at this juncture, when Suharto finally lost the backing of
his closest allies, and military leaders signaled that they could not ensure
order, that he realized he had to step down.
It is clear that democratic changes have been implanted in Indonesia.
The last seven years in Indonesia have been unbelievable. The number
and breadth of changes that have taken place are dizzying. Where there
was once an autocratic regime that had the power to arrest and terrorize
its opponents, there is now a functioning democracy. Elections are
largely free and fair and contested by dozens of political parties, the press
is free and there are a wide variety of opinions and voices being heard,
civil society and NGO life is abuzz with activity.35 However, it is too
soon to say that reforms have both created a liberal democratic order and
have been consolidated. Democracy at this stage is imperfect.
Institutional changes have had the impact of opening up the political
system to vigorous and mostly fair competition. Winners and losers seem
willing to play by the rules. Despite all of these important changes, one
of the most important things that a democratic regime must be able to
do is protect the rights of minorities, and the government in Jakarta has
clearly not done this. The violence in Maluku, Pontianak, and West
Kalimantan (and perhaps soon to come in Papua) is horrific.36 Likewise,
the existence of paramilitary groups associated with different political
parties and outside of the formal structure of the police and army is a
profoundly antidemocratic force. The fact that disputing politicians can
mobilize street protests and violence against opponents through these
militia groups is highly disturbing. Corruption is still a terrible problem
Indonesia ● 97

and taxes both peoples’ pocketbooks and their faith in government. And,
although the military’s power is vastly weakened in the formal arena, it is
still active in extrajudicial killings and activities and is involved in illegal
enterprises such as blast fishing and illegal logging, which give it alternate
sources of income and a stake in holding on to territorial control in areas
where there are pockets of violence (sectarian or separatist). Additionally,
vote buying, patron–client ties, and a very weak judiciary mean that it is
hard to ensure a fair system.
So, how can we understand the significant positive changes that have
occurred and understand why democracy has a ways to go?

The Difficulties in Consolidating Democracy


There is a great deal of political science literature on both transitions to
democracy and on the consolidation of democratic reforms. As Haggard
and Kaufman argue, “economic conditions influence the timing and
terms of democratic transitions and post-transition political alignments.”37
They go on to expressly discuss the role that economic crises play in
transitions to greater political openness: “crises are neither necessary nor
sufficient to account for authoritarian withdrawal, poor economic
performance reduces the bargaining power of [authoritarian] incum-
bents and increases the strength of oppositions.”38 And, as they further
explain, economic crises change the demands of civil society or the
private sector, the loyalty of the military, and expectations of the larger
population. With the military still a powerful force in both Thailand and
Indonesia in 1997, one could easily imagine the economic crisis as a
justification for authoritarianism as this might have been a more efficient
way of enacting the “right” economic policies. Yet, almost the opposite
occurred; the military backed the passage of the new constitution in
Thailand and at least enough of the military leadership in Indonesia
decided that Suharto would have to go. So, reformasi was a success in
countries discussed thus far in the book. However, despite significant
efforts at cleaning and opening up the political process, Indonesian,
South Korean, and Thai politics have been plagued by corrupt practices
such vote buying and cozy relations among political, military, and business
leaders. Also, neither the military nor radical Islamic groups in Indonesia
have been fully reigned in. Why have reforms not had the desired effect
of reducing corruption and money politics and further consolidating
democracy?
The reform processes in Indonesia, Thailand, and South Korea largely
came from within (transformations), and so a great deal of compromise
98 ● Political Change and Consolidation

was enacted to co-opt hardliners into allowing reforms to go forward. In


Thailand the economic crisis was the last push to get acquiescence from
stalwarts in power. In South Korea the crisis weakened the power of the
chaebol to protect its interests and that of its conservative political allies,
and in Indonesia it was the necessary catalyst to openly blame Suharto
for cronyism.
In the flurry of scholarship that was produced in the happy aftermath
of the fall of communism, most of the focus was on the end of the
authoritarian order. It quickly became apparent that ending repressive
rule was not the same as creating a solid, enduring system that guaran-
teed free and fair elections, protection of civil rights and civil liberties,
an open press, and some sort of checks and balances or a sharing of
power among political institutions in general.
Consolidation of democracy is generally taken to mean a system that
is unlikely to break down, that is, we can expect it “to last well into the
future.”39 This seems simple, but it poses significant problems of opera-
tionalization and measurement.40 In order to describe and even to try
and predict consolidation, scholars look at the institutional or structural
underpinnings of the regime or at the attitudes and behavior of key
actors. In simple terms, do leaders play by the rules of the game and not
see themselves as being above the law? Are leaders willing to lose elections
and abide by the results? Schedler finds that scholars pronounce a demo-
cratic regime to be consolidated when leaders behave democratically,
when major political actors acquire democratic attitudes, and when the
socioeconomic and institutional foundations for democracy are in
place.41 Even after several successful and fair elections, democracy could
still be undermined by corruption or a lack of institutional checks and
balances. I argue that the consolidation of democracy (or the lack of it in
Indonesia) can be explained using the same variables that impact democ-
ratization in the first place. Since I found initial democratization to be a
product of internal and external variables, what has happened to these
elements since the economic crisis and what can they tell us about
democratic consolidation?

Connection Between the Economic Crisis and Political Reform


There is no question that the financial crisis of July 1997 served as a
catalyst for the passage of the new constitution in Thailand, the rise of
opposition politics in South Korea, and the ousting of Suharto in
Indonesia. Afraid of further political chaos, domestic and international
investors withdrew until they felt reassured that political reforms would
Indonesia ● 99

go forward and that politics would stabilize and leaders would be able to
make and implement coherent economic policy. Had political change
not occurred, members of the ruling elite in both countries faced the
threat of a further economic decline, something that was almost
unthinkable.
In Thailand, South Korea, and Indonesia the vital independent variables
(that helped bring positive change in the wake of the economic crises)
are now more concerned with either maintaining their own power or
more focused on security concerns than an democratic ones. These
variables include individual leaders, the military, and the international
community.
Externally, the IMF and global investors are now less worried about
or focused on accountability and transparency.42 Now major external
pressure is coming from the United States and its “war on terror.” The
United States and global investors are worried about stability and
antiterrorist actions.

A huge amount of change is needed to make the country more attractive


in investment terms.
Hadaway’s list of long-standing concerns is the same most investors
rattle off: “Law enforcement issues, policy and regulatory issues around
tax, labour, intellectual property, crime, security, and regional autonomy
plus concerns on the deterioration of, and desperate need for, infrastructure,”
he says.43

The aforementioned concerns have more to do with stability and specific


policy choices than broad issues of democracy and political or institutional
reforms.44
In Indonesia, the internal hurdles to democracy include the lingering
power of the military, the continuation of sectarian or separatist vio-
lence, and the existence of paramilitary organizations. Like in Thailand
and South Korea, the external pressures for democracy have dissipated,
the international community is now focused on Indonesia not because of
a need for economic and political reforms but because it is perceived to
be an important nexus in the war on terror.

Internal Pressures
In Indonesia, internal pressure has resulted in reforming the political
process, but the most difficult issues facing the country are economic
problems, the power of the military and paramilitary organizations,
100 ● Political Change and Consolidation

territorial problems, and radical Muslim organizations such as JI. There


is little consensus within the country on how to view these “problems” or
even if they are problems at all. Poll data during and before the election
seemed to show that people were more concerned with social welfare and
economic issues than with either political rights or terrorism from
Islamic extremists.45 So the internal pressure for democracy may have
dissipated. Here is how these key issues may make consolidation of
democracy more difficult.

Corruption
Transparency International has rated Indonesia as the twelfth most
corrupt country in the world. It is the third most corrupt country in Asia
after Bangladesh and Myanmar. Corruption is not new. The New Order
administration created a myriad of informal systems of influence and
incentives for corruption. Although there have been massive political
changes since 1998, little progress has been made in fighting corruption.
This reflects powerful vested interests and weak law enforcement. While
corruption is often seen as a tax on business, there is now a great deal of
discussion of its impact on the poor. The poorest segment of the popu-
lation using health centers had to pay bribes for about one-third of their
visits and there are similar problems in the court system where poor
families are unable to pay the millions of rupiah in bribes to judges and
will inevitably end up feeling that justice is only for the rich.46
The Corruption Eradication Commission (KPK) is looking into
charges of kickbacks against the Indonesia Election Commission in last
year’s elections. On Friday, May 20, 2005, Nazaruddin Sjamsuddin, the
respected head of the Election Commission, was arrested for alleged
payments made by firms that won contracts to supply equipment for the
elections. Other senior commissioners are also under suspicion. In addi-
tion, Minister for Justice and Human Rights Hamid Awaluddin may also
be called in for questioning by the Anti-Corruption Commission.
President SBY has authorized graft probes into dozens of provincial
officials and several national legislators. No arrests have been made in
these cases.47 Cracking down on corruption is vitally important for
Indonesia, both for domestic and international reasons. Corruption, and
the perception of corruption, are some of the strongest underlying reasons
for popular discontent. Also, high levels of corruption certainly scare off
foreign investment. SBY has spoken a great deal about the need to
confront these problems head on, but there is a sense that certain political
and economic elements will be protected from prosecution. The
Indonesia ● 101

military’s privileged position in the economy has not been challenged,


nor have those with connections really been faced with competition for
business. To fully tackle corruption would mean further reforms of the
judiciary, making courts more independent from pressure and politics,
cleaning up the police and ending ties between police and business
opportunities, and challenging cronyism, which allows political leaders
to make connections with business interests for patronage ties and
mutual favors. Corruption hinders democratic consolidation because
politicians have a vested interest in maintaining the status quo and so are
less likely to “do the right thing” or play by the rules, and because it
weakens trust between citizens and their government. If citizens believe
that policy-makers are making choices based on narrow and powerful
interests instead of on behalf of constituents, it undermines accountability
and democracy.

Moderate versus Militant Islam


Consolidation of democracy is also made more difficult because the
question of the role in politics for Islamic groups has not been resolved.
Islamic organizations are a critical element in Indonesian society.
Indonesia has a rich tradition of community/Mosque involvement in
social services. Religious associations in particular have been very active
in running schools, health centers, and orphanages. The largest Islamic
organization in Indonesia (and in the world), Nahdlatul Ulama (NU),
claims thirty million supporters. It runs schools and community associ-
ations throughout the country. As of 2001 Muhammadiyah (the second
largest Islamic organization in the country) had 9,527 educational insti-
tutions of various types and 3,775 health and welfare-related centers.
Yayasan Indonesia Sejahtera is another community organization that
operates a broad range of development programs at the community level.
Its central focus is on public health and training and education. NU and
Muhammadiyah are powerful, well-entrenched, and moderate grassroots
operations.48 NU provides the support base for the PKB and for the PPP.
The PKS and the Crescent Star Party rely on members of Muhammadiyah
for their support base. The organizations mentioned here are moderate
ones.49 They promote Islamic values, traditions, and practices and in
some cases may advocate Islamic law; however, they are committed to
working within the law, and as part of the political system to advance
their goals. And, for the most part, Muhammadiyah, NU, and Yayasan
have said that they support the idea of a pluralist, democratic Indonesia.
These organizations were in fact instrumental in helping democracy
102 ● Political Change and Consolidation

bloom in 1998 and afterward. However, these large, powerful, and


moderate organizations are not the only voices of Islam in Indonesia. Since
the fall of Suharto, more fundamentalist or militant Islamic groups have
become vocal. Using new democratic freedoms, radical organizations have
become adept at fund-raising, rallying people, and spreading more con-
servative and intolerant views of Islam. There are several NGOs that
serve as financial and recruiting conduits for militant Islamic organizations.50
After the 9/11 attacks on the United States, Indonesia condemned
terrorism but denied that it had a problem in its own backyard. The
October 2002 bombings in Bali, followed in 2003 and 2004 by the
bombing of the Marriott Hotel and the Australian Embassy in Jakarta,
respectively, forced Megawati to acknowledge the presence of militant
groups in Indonesia. There are many Islamic organizations that walk a
fine line between genuine civil society organizations that play a
constructive role in society and organizations that are more militant in
nature. Two groups that do not fit neatly into either category but that
represent either end of the spectrum are the Tarbiyah movement and the
Islamic Defenders Front (FPI).
The Tarbiyah movement began on college campuses in the late 1970s.
Its aim was to promote group discussions of Islam and spirituality and it
began to train members in the art of power politics and to sponsor
members for student body elections. As Tarbiyah activists graduated,
they spread the network beyond campuses to form religious study circles
in the companies where they worked and in the mosques where they
worshiped. The movement then established the Justice Party51 as a vehi-
cle to promote Muslim values. Tarbiyah has also begun to start elementary
and secondary schools and to introduce leadership training programs
into the curriculum.52 This movement straddles the line between main-
stream moderate views that support a pluralist vision of the Indonesian
state and more fundamentalist actors working for an Islamic state. While
Tarbiyah and PKS mainly promote cleaner government and social
welfare goals, the desire to promote Islamic law has not been erased from
their party platform. It is unclear if PKS will continue to be a voice of
social justice and moderation, or if their larger goal of achieving an
Islamic state will dictate party action and policy choices.
Another organization that is becoming more active is the FPI. FPI
seeks to promote Islamic values. It perpetrates violence against places
serving alcohol, particularly during Ramadan. It was formed in 1998 by
Habib Rizaq and is now the largest radical Muslim group in the country.
It was able to organize demonstrations of over ten thousand people in
Indonesia ● 103

Jakarta in October 2001 and has repeatedly organized protests against


the United States and its allies for their actions in Iraq.53
There are a wide variety of radical Islamic organizations that aim to
see greater proselytizing activities and the Islamicization of politics and
society. I differentiate these groups from the ones discussed previously, as
the more radical groups are willing to use violence to achieve their aims.
The organization with which to begin to try and understand militant
Islam in Indonesia is Darul Islam (DI). It began as separate rebellions in
West Java, South Sulawesi, and Aceh in the late 1940s and early 1950s
and has become a loose, but powerful, web of personal contacts that
extends throughout Indonesia. DI seeks to create an Islamic state,
Negara Islam Indonesia (NII). Although an illegal organization, DI is
more or less tolerated. There are some fourteen factions of the DI move-
ment; the composition and goals of offshoot organizations, from JI to
nonviolent religious groups, vary widely. The history of DI shows the
difficulty in really eradicating the movement. It has survived and
adapted after each period of defeat. From 1977 to 1982 virtually its
entire leadership was arrested and yet this just enhanced the credentials
of DI members and did not weaken their commitment to the cause.
Although there are rifts and power struggles at the top, this seems to
have little impact on cooperation and recruitment at lower levels.54
The extended DI family includes the following organizations: the JI,
the Majelis Mujahidin Indonesia (MMI), Laskar Jundulloh, the Banten
Group, and the Angkatan Mujahidin Islam Nusantara (AMIN). This list
does not include DI veterans who have established their own organiza-
tions and followers but who choose to operate outside of any formal
structure or connection to DI. These people may keep in contact with
each other, intermarry, and remain connected across generations.
JI is a regional component of Al-Qaeda; it has local and regional con-
cerns and works with Al-Qaeda for training and financing. JI officially
came into being on January 1, 1993, and was founded by Abdullah
Sungkar. Many of the JI leaders are children of DI leaders. The roots of
JI can be traced to Indonesia in the 1960s when radical clerics Abdullah
Sungkar and Abu Bakar Ba’asyir, both of Yemeni descent, established an
illegal radio station from which they advocated shariah. They established
an Islamic boarding school in Solo, Al-Mukmin, commonly referred to
as Ngruki. It now has about nineteen hundred students. The school
teaches a hard-line and literal interpretation of Islam based on Salafi
Wahhabism. According to Zachary Abuza, the school’s alumni reads like
a list of who’s who of Southeast Asian terrorism.55
104 ● Political Change and Consolidation

JI is organized into cells, mantiqi. There are four cells covering


Southeast Asia. Each cell is fairly independent of the others and has a
specific function. The Indonesian cell, mantiqi 2, developed two para-
military components: Laskar Mujahidin and Laskar Jundullah in 1999
and 2000, respectively. The Indonesian cell is tied to Abu Bakar
Ba’asyir’s political organization, the MMI. MMI is a large umbrella asso-
ciation for about one hundred small radical and militant groups across
the country. Many of the Indonesians who were recruited by and became
part of the Malaysian JI returned to Indonesia after the fall of Suharto.
The Marriott and Australian embassy bombings are also the work of JI
in cooperation with the Banten Group (a militia offshoot of JI). Clearly,
these militant or radical groups are a threat to democracy and they hin-
der full consolidation of democracy. They are a threat for the following
reasons. First, should they gain popularity and achieve their aim of an
Islamic state (or even caliphate), the practices and liberties of the current
pluralist order would likely be dismantled. Even with little chance of
achieving their goals, these militant organizations are a threat to democ-
racy because they provide justification for the government to restrict cer-
tain liberties in the name of protecting security. Or, if people sympathize
(and by all accounts the number of Indonesians who do is shrinking with
each bombing) with militant aims or methods, then other conservative
Islamic groups or more mainstream politicians afraid of seeming anti-
Islamic can use this support to advance an Islamic or antiliberal agenda.
There is one further element of these groups that poses a challenge to
democracy. The government’s decision to tread lightly and not outlaw JI
or MMI for fear of angering devout Muslims is connected with a larger
timidity about acting forcefully against violence in the name of Islam.56
Democracy cannot be said to be fully consolidated in Indonesia until the
government is willing to protect the security of all its citizens.

External Pressures
Globalization can be a positive force for political reform and liberaliza-
tion or it can harm the process of democratization. When South Korea,
Thailand, and Indonesia were under IMF bailouts, their policies were
under a microscope. Economic policy making was constrained by IMF
strictures. This impacted both policy making and politics. Now that all
three countries have graduated out of the IMF’s oversight, that external
pressure is gone.
When terrorists attacked the United States on September 9, 2001 and
then when the United States decided to attack Iraq in the spring of 2003,
Indonesia ● 105

President Bush’s administration worked hard to convince countries


around the world to join the United States’ global war on terror. Many
countries in Asia chose to work quietly with the United States in track-
ing and eradicating militant Islamic groups within their own borders,
but many refused to publicly endorse U.S. policy goals, both because
many leaders disagreed with American actions in Iraq and because many
feared public backlash at home. Indonesia under Megawati tried to bal-
ance two needs. Megawati was the first foreign head of state to the White
House after 9/11 and she offered heartfelt condolences and sympathy for
the victims. However, as the United States increasingly tried to put pres-
sure on the government of Indonesia to crack down on militant groups
within the country, Megawati resisted. In fact, while the president was
verbally supporting the United States, the vice president, Hamzah Haz,
was openly criticizing it and lauding bin Laden. Megawati was unwilling
(or perhaps unable) to firmly confront and crack down on radical
Islamic groups. Also, she resisted further overt support for the United
States. It was not until the Bali bombing that Megawati acknowledged
Indonesia might be home to Islamic terrorist organizations working
both against her regime and the nations in the West. Finally forced to
confront this reality, Megawati and now SBY are forced to balance the
interests of secular moderates and those concerned with their own secu-
rity within Indonesia with a very large number of Muslims who feel that
U.S. policies are anti-Islamic and that any agreement or acquiescence to
root out terrorism from the Indonesian government is a betrayal of
Muslim solidarity. Meanwhile, the United States has continued to try
and exert pressure on Indonesia to take more visible actions against JI
and other militant groups.57

Conclusion
Democracy successfully emerged in Indonesia between 1998 and 2004,
but further changes may be more difficult. In Indonesia leaders do seem
willing to “play by the rules of the game,” and given people’s interest in
voting (turnout was high in three rounds of national elections in 2004,
and although it has fallen off somewhat with each successive round, it
has continued to be high enough to be credible as local areas go to the
polls to elect provincial, district, and village leaders for the first time),58
they seem fully engaged in and committed to the ideas and behaviors of
democracy, but playing by the rules and attitudes supportive of democ-
racy may not be enough. Leaders either do not have the power or do not
have the will to fully rein in corruption, militant Islamic groups, or
106 ● Political Change and Consolidation

military and paramilitary groups, and these obstacles to democracy may


ironically help certain elites stay in power. Similarly, some of the prob-
lems mentioned earlier, for example, corruption and the weakness of the
judiciary, may be incredibly difficult to fix.
Like Thailand, economic concerns seem to trump both security
concerns and the will to further consolidate democracy. In this chapter,
I argued that political reforms in 1997 were the product of elite actions
and decisions. There are different groups of elites that matter: leaders
within the regime, such as SBY, and elites in civil society. The factors that
tipped the scales toward positive change in 1998 were pressures from
reform-minded politicians and military generals, mass protests in Jakarta
and elsewhere, and pressure from the IMF. The same confluence of
interests no longer exists. Since democracy is only weakly consolidated,
it is possible to imagine an erosion of some of the new political reforms
and liberties, either in the name of security or because a leader feels inse-
cure in his or her position of power. Because Indonesia faces such signif-
icant problems, citizens might be tempted to support a charismatic
leader who promises to fix the system, provide economic and social
goods, and halt the territorial divisions within the country. Because laws,
institutions, and maybe democratic values are still in their infancy, it is
possible that democracy could be challenged in Indonesia in the years
ahead.
CHAPTER 4

Malaysia: Defiance in the


Face of Adversity

I
n 1997 Malaysia shared many common economic features with the
other countries hit by financial crisis. All had undergone rapid financial
liberalization without careful attention to corporate governance. There
was generally poor macroeconomic management and high levels of state
intervention in the economy. Loss of investor confidence in the summer of
1997 resulted in massive capital flight, first from Thailand, then markets
and investments plummeted in Indonesia, and Malaysia and finally in
South Korea. Malaysia, unlike Thailand, Indonesia, and particularly South
Korea, was not as severely affected by short-term debt problems, but it did
suffer from financial sector weaknesses coming from unwise and sometimes
politically motivated lending policies.1 Despite these similarities, Malaysia’s
reaction to the crisis was starkly different from that of her neighbors. As the
introductory chapter briefly explains, Malaysia did not turn to the IMF for
help, and although there was political turmoil (protests and a great deal of
new political activism and the formation of new political and social organi-
zations) in 1999 that was related to the economic crisis, Prime Minister
Mahathir and his party, UMNO, the United Malays National
Organization, maintained power and political control. Malaysia is most
commonly characterized as semi-authoritarian (something that will be
explained at greater length later in this chapter) and it remained so even
after the crisis and after considerable public pressure for change.
How can we explain the different political conditions and outcomes
in Malaysia? How was it that political reform, or “reformasi” as it was
called in Malaysia and Indonesia, was unable to gain enough strength to
overturn the old order? And what are the current prospects for political
reform in Malaysia today?
108 ● Political Change and Consolidation

The Events of 1997–1999


The Crisis
Through the 1990s Malaysia’s economy was in pretty good shape. Signs
of problems began to surface in mid-1997. First, there was an increase in
the current account deficit in the context of slow appreciation of the
effective exchange rate. Like Thailand and Indonesia, in the summer of
1997 the Malaysian currency, the ringgit, fell precipitously and the
Central Bank tried to prop it up. As with elsewhere in the region,
Malaysia suffered a currency and banking crisis, but low levels of external
debt kept it from being a debt crisis.2 While Thailand, Indonesia, and South
Korea opted for a bailout package from the IMF, Prime Minister Mahathir
went on a foreign offensive. At a World Bank–IMF meeting in Hong Kong in
September 1997, Mahathir lashed out at George Soros, “Jewish bankers,” and
other global economic forces as the source of Malaysia’s (and Southeast Asia’s)
problems. He would accept no money or advice from the IMF and hinted that
Malaysia might adopt currency controls. The ringgit fell to 3.10 to the
U.S. dollar, and the Kuala Lumpur Stock Exchange (KLSE) fell another 760
points, a four-year low.3 Every time Mahathir made another speech, there was
a selling off of the ringgit. Hence, his deputy prime minister Anwar Ibrahim
would then try to quietly reassure investors that Malaysia would not invoke
some of the proposed (by Mahathir) restrictions on currency trading. Anwar
would downplay Mahathir’s racist and anti-Semitic remarks as nothing but
bluster. Throughout the fall of 1997 there were many rumors that Anwar and
Mahathir were not getting along and that behind the scenes there was a
dramatic jockeying for control over economic policy making.4
In December of 1997, seemingly with Mahathir’s blessing, Anwar
appeared to be in full control of economic policy. Government spending
on large projects was put on hold, interest rates were raised, and some
austerity and corporate restructuring measures were begun. This was
viewed by many as a rebuke of, or at least an end to, the aggressive
spending that Mahathir had practiced for over ten years. But, this was far
from the end of the contest. Over the next few months Mahathir became
more assertive about saving large, high-profile mega projects and com-
panies such as Malaysia Airlines. On June 24, 1998, Daim Zainuddin
was appointed special functions minister and given the task of oversee-
ing economic policy. Most political analysts believed that Daim would
also serve as a check on Anwar’s power.
By August 1998 the Malaysian economy had not rebounded and in
fact the ringgit had fallen to 4.50 to the U.S. dollar, with the stock
exchange (KLSE) at rock bottom levels below 300 points.5 On August 30,
Malaysia ● 109

1998, Daim Zainuddin announced that high interest rates (promoted by


Anwar) were wrong and he called for a slow and incremental easing of
monetary policy. This amounted to a political mandate of policy to Bank
Negara and its governor Tan Sri Ahmad Mohd Don resigned in protest.6
On September 1, 1998, Mahathir announced that the country was
imposing capital controls, the currency was fixed at 3.80 ringgit to the
U.S. dollar, and all sellers of Malaysian shares would have to hold proceeds
in ringgit for one year. The next day Anwar was fired from his posts as
deputy prime minister and minister of finance. Later he was expelled
from the party and arrested on charges of corruption and sodomy.7 His
ouster triggered demonstrations and calls for political reform. It was
widely believed that Prime Minister Mahathir was behind Anwar’s arrest
and that the charges against him were trumped up.
The severity of the crisis should not be underestimated. The economy
in 1998 contracted by 8 percent; previous downturns had not exceeded
1 percent.8 In the decade prior to 1997, Malaysians had grown
accustomed to high levels of economic growth and rising incomes to
match. A new middle class had emerged. Since the 1970s, Malaysia’s
economy had been heavily state-directed. Thus, people looked to the
state to solve economic problems. Failure to do so put state power and
legitimacy in question.
The combination of poor, or erratic, handling of the economic crisis
and the firing of such a popular figure as Anwar Ibrahim triggered
unprecedented politicization. Malaysians saw the crisis in part as a symbol
of domestic weaknesses: a lack of full democracy, justice (keadilan),
openness (keterbukaan), and the pitfalls of KKN (Korupsi, Kronyisma,
and Nepotisma). Suddenly, in the regular press and in alternative
outlets, there were debates over the reforms that were necessary to
address these evils. Prime Minister Mahathir was initially unconcerned
by these rumblings. However, when Suharto was brought down in May
of 1998, he began to see discussions of reformasi as a direct threat to his
own tenure. It is not surprising that conflicts with Anwar may have
intensified after this period.9

The Anwar Debacle


While a reform movement and political protests did take root in late
1997 and through the first months of 1998, they did not pose much of
a real threat to the political or economic status quo. However, when
Anwar was fired hundreds of supporters rallied outside of his home. In
many ways he was the perfect person to rally popular support and to
110 ● Political Change and Consolidation

head opposition to Mahathir’s regime. He was (and is) viewed as a pious,


devout Muslim, a clean politician, and a charismatic speaker even when
the inspector general of police Tan Sri Rahim Noor confirmed that
Anwar was being investigated in relation to claims of sexual misconduct
and corruption. Allegations about these charges had been made in a
controversial book by Khalid Jafre, 50 Reasons Why Anwar Should Not be
Prime Minister; nevertheless, people were not deterred from supporting
him and criticizing Mahathir and the government’s handling of the eco-
nomic crisis.10 Few people seemed to believe the accusations or charges
against Anwar. In fact, by September 8, just a week after being fired,
crowds of several thousand people were flocking to hear Anwar speak. As
Mahathir’s criticisms of Anwar continued (for a lack of morals), Anwar
fought back by calling Mahathir paranoid and saying that the prime
minister was afraid he would wind up overthrown like Suharto. From
September 14–20, 1998, the reformasi movement really began to take
shape. Anwar traveled around Malaysia and visited Penang, Kedah,
Malacca, and Selangor to speak; some estimates asserted that upward of
seventy-five thousand people attended some of the rallies. Anwar gave
rousing speeches about the need for political reform and he began calling
for Mahathir to step down.11 Two close associates of Anwar’s, former
speechwriter Munawar Anees and Sukma Darmawan, were arrested and
pled guilty to homosexual relations with Anwar (they later retracted
these confessions saying they were forced to state these allegations). On
September 20, 1998, Anwar spoke at a large rally in Kuala Lumpur (KL)
from the top of the National Mosque and he denounced Mahathir and
swore his innocence. The rally got tense and the police used water can-
nons, batons, and tear gas to break up the demonstration. That night
Anwar was arrested and held under the ISA, the Internal Security Acts.12
Opposition groups that had only begun to really get their feet wet
were able to organize mass protest rallies and demonstrations. The police
tried to quickly break up the demonstrations with a significant show of
force—tear gas and nightsticks were used to disburse protestors. Anwar
was held for nine days under the ISA without being charged with a
specific crime and without being allowed to meet with a lawyer or family
members. Then on September 29, 1998, he was brought to court and
charged with nine counts of graft and sodomy. After being held incom-
municado for nine days, Anwar appeared to have a black eye and bruises.
He was refused medical treatment and his wife and supporters quickly
charged the police with mistreatment and physical abuse. Demonstrations
began to be held every Saturday along Jalan Raja Laut and elsewhere in
KL. The police and the media were very critical of the demonstrators for
Malaysia ● 111

disturbing the social order. The police used increasing levels of force to
confront the protestors. On October 14, Anwar was released from ISA
detention but remained in prison due to the charges against him.13
The demonstrations began to subside at the end of 1998 but politi-
cization continued in other forms. The Internet became the site of much
discussion and organization. Some of the earliest organizations formed
were the Gagasan Demokrasi Rakyat (The Coalition for People’s
Democracy), to work for a resolution to the political and economic
crises and to build a united, free, and democratic Malaysia, and the Majlis
Gerakan Keadilan Rakyat Malaysia (Council of Malaysian People’s
Justice Movement). These were formed by activists, intellectuals (such as
Dr. Chandra Muzaffar), and others. Membership of both groups over-
lapped and their goals included specific policy actions such as abolishing
the ISA and promoting a freer judiciary and media.14 Anwar’s wife,
Dr. Wan Azizah, formed the Pergerakan Keadilan Sosial (Social Justice
Movement, or ADIL) in December 1998 to help cement pro-Anwar feeling
and reform efforts. Anwar’s trial began on November 2, 1998. It was
widely perceived as politicized and unfair, and as such provided a rally-
ing point and a cause for groups to increase their visibility and support.
In April 1999, ADIL was transformed into the Parti keADILan
Nasional by taking over an existing minor party. The major opposi-
tion parties made the decision to contest the next elections under a
common platform, the Barisan Alternatif (BA). On July 2, 1999, the
four opposition parties, PAS (Partai Islam se Malaysia, an Islamic
party), DAP (Democratic Action Party), keADILan, Parti Rakyat
Malaysia (PRM, the socialist party), agreed to form the BA coalition
and they declared a common set of principles based on democracy and
the special position of Malays. References to an Islamic state or law
were absent; PAS had agreed to drop these goals in the interest of
coalition unity. 15
The opposition parties and NGOs also began a vigorous effort at
reaching out to supporters and others to gain a wider following. They
held ceramah (lectures held in offices or homes of supporters) and made
cassettes and videos with their ideas. Meetings were often emotional,
appealing to people’s sense of fairness, the cruelty of the regime to
Anwar, and the need for greater democracy. Money was collected to sup-
port the BA coalition. In April of 1999 large demonstrations were again
staged to protest the six-year jail sentence handed down to Anwar. Tens
of thousands attended a protest at PAS headquarters. Police retaliated
with violence and arrests and the demonstrations again waned. In June
1999 eight pro-reform NGOs established the Malaysian Citizens’ Election
112 ● Political Change and Consolidation

Watch (PERMANTAU) to try to have some oversight of the upcoming


(but as yet unscheduled) elections.16

The 1999 Elections


In the run up to the elections Mahathir and the Barisan Nasional, BN
(the ruling coalition of which UMNO is by far the most powerful party)
tried to contain and confront the opposition forces. Many of these
attempts included attacking Anwar and trying to further discredit him
and his supporters with new accounts of his involvement in money pol-
itics, and trying to hold the line on charges that Anwar had been beaten
in prison (true) and that he suffered from arsenic poisoning (not true).
Prime Minister Mahathir dissolved parliament and called for new
elections on November 10, 1999. The elections were to be held on
November 29, 1999. Going into the election the government and Mahathir
were able to point to an economy that had rebounded considerably from
the crisis,17 and the BN had introduced a budget full of popular
spending measures just that October. The opposition coalition, the
BA,18 ran on the issue of democracy. It argued that Malaysia needed
basic democratic rights, freedom of speech and assembly, and a more sig-
nificant balance of power among political institutions. Parliament
should be more independent of the prime minister, and there was a clear
need for an independent judiciary, civil service, and media. BA advo-
cated repealing the ISA, the Police Act, the Sedition Act, the Official
Secrets Act, and the Education Act, all of which severely curtailed civil
rights and freedoms.
In response Mahathir and BN candidates forcefully argued that
Malaysia was democratic and that protestors and advocates of reformasi
were sowing the seeds of instability and chaos, and perhaps opening the
door to communal violence such as that which occurred in Indonesia in
the spring of 1998.19
The election results were as follows: BN was able to hold on to a
two-thirds majority in parliament, winning 148 out of 193 seats.
Significantly, however, 46 of these seats were from East Malaysia; with-
out these seats BN barely won a simple majority.20 This represented a
10 percent drop in votes for BN (from winning 65 percent of votes in
1995 to 56 percent in 1999). BA won 45 seats in parliament, 27 of
which went to PAS.21 In addition, PAS held on to control of the state of
Kelantan and also took control in Terengganu. The election was extremely
dirty, with more accusations and mud slinging than usual. Both the BN
and BA coalitions did their best to discredit and criticize the other side.
Malaysia ● 113

While there are different ways of interpreting the election results,


there is little debate that it was a setback for Mahathir’s ruling party,
UMNO. Although BN did win the desired two-thirds of seats in
parliament (necessary to change the constitution at will), UMNO itself
lost twenty-two seats and four cabinet ministries to non-UMNO
BN parties.22 Since independence UMNO has been accustomed to being
able to dominate and control the multiethnic BN party coalition. While
still the lead vote getter in 1999, BN clearly lost Malay support to PAS
and BA candidates and the 1999 results were the worst electoral returns
for UMNO since 1959.
So, how did Mahathir and his allies stay in power in the face of
domestic and international opposition and while entrenched leaders
around him were sent packing? Malaysia, like Indonesia, Thailand, and
South Korea, had many of the same independent variables at work in
1997 through 1999. The economic crisis hit Malaysia with a good deal
of severity and the country had difficulty recovering from it. People
protested in the streets against the regime, domestic and international
organizations criticized and railed against Mahathir for his unfairness to
Anwar and his handling of economic problems. All of these elements
were roughly similar in Malaysia as elsewhere in the region where politi-
cal reforms did occur. So, what was different about Malaysia?

Explaining the Lack of Political Reforms


The clearest difference was that Mahathir avoided turning to the IMF
for help. In bypassing an outside bailout, Mahathir was much freer to go
against liberal economic doctrine. By allowing government spending on
pet projects and favored companies to resume, he could continue to pro-
tect and reward his supporters, both within the party and within the
business community. By firing Anwar and having him arrested Mahathir
was also able to remove the biggest obstacle to implementing capital
controls and he was also able to avoid being constrained by liberal eco-
nomic policy making. Austerity measures and the dictates of the IMF are
extremely unpopular measures for leaders to have to take—they lose a
considerable amount of control over monetary policy and also some
control over fiscal policy making. This can make them seem weak and
ineffective. This would be a challenge for any leader, but is even more
problematic for authoritarian leaders who do not have a strong sense of
legitimacy through legal–rational means such as open elections. It is a
further problem in economies such as those in Asia where there are
strong or cozy ties among political and economic elites. These patronage
114 ● Political Change and Consolidation

links are the basis for both the economy and the political system. It can
be quite damaging for a leader to jeopardize the economic power and
interests of those who in turn provide financial backing for political
leaders or for their family/friends. Now, Mahathir may not have needed
to sideline Anwar or impose capital controls to stay in power, but cer-
tainly doing these two things increased his power in the short term.
IMF constraints may be the missing independent variable to explain
why Malaysia did not go through a political change in the immediate
aftermath of the economic crisis and throughout the period following
Anwar’s dismissal, but it is not the answer for why Mahathir and the ruling
coalition were able to hang on to power as domestic criticism mounted
during the end of 1998 and into 1999. Even though they did poorly in
comparison with previous election results, the ruling coalition and
Prime Minister Mahathir maintained their lock on power in the 1999
elections. All the ingredients for an upset seemed in place. Opposition
parties joined forces to run as a coalition, there were issues that voters
cared about at stake (the economy, democracy, and Anwar’s fate, among
others), and pressure from outside Malaysia seemed to point against
Mahathir. Yet, no upset occurred. Why?
The reasons for BN success in the 1999 election have to do with the
nature of the electoral system, the media, ethnic relations, and the state
of the economy. Each of these will be explained in turn.

The Electoral System


Malaysia holds regular parliamentary and state elections and they are
generally contested vigorously by multiple parties. Since independence
in the 1950s, the ruling coalition BN (formerly known as the Alliance
until 1974) and its lead party UMNO have dominated politics and won
the most seats in elections. UMNO claims to be the party of the Malay
majority and argues that it has been responsible for Malaysia’s successful
independence from Great Britain, economic progress, and ethnic har-
mony. UMNO holds up the mantle of forging a multiethnic political
coalition with the Chinese and Indian communities through their
respective parties, the Malaysian Chinese Association (MCA) and the
Malaysian Indian Congress (MIC). It has championed Malay supremacy
and rights while being able to reassure Chinese and Indian Malaysians
that they have a home in Malaysia and that certain rights of theirs will be
respected (a seat at the political table, the right to practice religions other
than Islam, some protection for vernacular language usage, and protection
of economic and property rights).23 UMNO has a grassroots network
Malaysia ● 115

that works at the community and village level to build up patronage


networks and the loyalty of voters.
Election districts are also configured in a way so as to favor UMNO
and BN parties. Districts are not equal in terms of size of population and
rural voters’ districts, which are UMNO and Malay strongholds, have far
lower numbers of voters per elected office holder than urban districts.
This serves to dilute the power and influence of urban voters. After every
election, parliament, where BN controls more than two-thirds of the
seats, creates new districts, generally in areas where they are likely to be
the beneficiaries of voter support. This makes it extraordinarily hard to
imagine an opposition party or opposition coalition winning enough
seats to really disturb BN and UMNO’s power.24

The Media
Most media outlets, particularly newspapers, are owned by companies
affiliated with the major BN parties. Press accounts tend not to be very
critical of the government. The government has generally assumed that
the function of the mass media is to help it spread information and
policies for the betterment of the population.

A greater grip on the press was administered in 1972 when the Malaysian
government decided to change the ownership structure of the press. This
decision was administered in 1974 as an amendment to the Printing
Presses Bill, which ensured that foreign ownership of Malaysian newspapers
would end and that Malaysians would be the majority shareholders of
local newspapers. This had devastating effects as Anuar (2000) further
explains. “On paper, such a move appeared laudable . . . but in practice,
however, it resulted in the monopolisation of the Malaysian press by
ruling political parties and their economic allies.” This development of
course guaranteed even further press control for the government which
was illustrated in the purchase of Malaysia’s leading newspaper group, The
Straits Times Press, by government-owned company Pernas in 1972.25

In 1987 three mainstream newspapers The Star, Sin Chew Jit Poh, and
Wantan also lost their publication permits for a brief period. Holding
corporations, associated with the dominant parties in BN, are now large
stakeholders in these and other newspapers.
The advent of the reform movement came at a time when Internet
usage was becoming quite high. NGOs and opposition parties such as
Keadilan and PAS used the web to get information out to people and
116 ● Political Change and Consolidation

supporters. They used e-mail distribution lists and the web to criticize
and attack Mahathir and the government.

Ethnic Relations
Malaysia is about 60 percent Malay, 30 percent Chinese, and 10 percent
Indian. These three communities have mostly lived together without vio-
lence. A bargain was struck in the run up to independence that the
Chinese and Indian communities would become full citizens and that
their economic assets would be unmolested, but they agreed that the polit-
ical system would be controlled by the Malays. The constitution defines a
Malay as someone who is a Muslim and who practices adat, that is, Malay
customs. As such, Chinese and Indians, the vast majority of whom are
Malaysian citizens but not Muslims, can never become “Malay.”26
In 1969 the ethnic tolerance broke down. The ruling coalition lost
more seats than expected in the election that year and this sparked
demonstrations and finally rioting in the streets of KL and elsewhere.
The Chinese were assaulted and their stores, homes, and property were
destroyed. The violence and damage became the justification for passing
the NEP or the New Economic Policy in 1971.27 Broadly speaking, this
was a set of economic policies put in place to favor ethnic Malays. The
riots were blamed on the inequality of the different communities. The
Chinese were dominant economically and the NEP aimed to redistribute
this economic power. Companies were told that they must hire certain
numbers of Malays, and ownership of companies needed to be diversi-
fied and parceled out to Malay investors. Universities set aside percent-
ages of their spaces for Malay students. The NEP sought to raise
bumiputera (Malay) share of corporate stock ownership from 1.5 percent
in 1969 to 30 percent in 1990. Government information suggests that
Malay ownership rose to 18 percent in 1990 and slightly over 20 percent
in 2000. UMNO argued that these measures were necessary both for
fairness among the different communities and for Malaysia to return to
ethnic harmony. Chinese businesses largely complied with the NEP
terms and over time a genuine Malay middle and professional class
emerged. In 1991 the NEP was replaced by the National Development
Policy and in 2001 by the National Vision Policy. The new policies have
greater emphasis on rapid economic growth and industrialization, how-
ever, there is widespread public perception that the NEP’s ethnicized
policy targets still stand.28
Regardless of one’s assessment of the NEP, there is no question that
UMNO took credit for a booming economy and fantastic changes in
Malaysia ● 117

standards of living across peninsular Malaysia from the 1970s through


the 1990s. Chinese and Indian economic and political leaders basically
acquiesced to the economic demands made on their communities and
businesses; in exchange they maintained their representation within the
ruling coalition, had some political power, and extracted promises that
vernacular education and business opportunities would continue to be
protected. Most importantly, the government worked to end ethnic
violence.
Since UMNO has been most clearly associated with pro-Malay poli-
cies, it might seem that the Chinese and Indian communities are logical
supporters of the long-standing opposition party, the DAP. The DAP has
promoted a multiethnic vision of Malaysia, rather than BN’s polarized
ethnic relations. Support for the DAP has varied during different periods
and sometimes it seems possible to assert that 50 percent of Chinese
have voted for the DAP.29 Again in 1999 one might have believed that
the Chinese community would have participated fully in the reformasi
campaign for greater democracy and openness. Challenging Mahathir
and UMNO’s rule might have resulted in a more fair political system
where the Chinese could have become more powerful players. However,
it seems that the Chinese supported BN parties such as MCA, UMNO,
MIC, Gerakan, and so on in overwhelmingly large numbers. Why might
the Chinese be among the strongest supporters of the status quo?
The reasons are twofold. First, it is possible that Chinese in Malaysia
feared communal violence could occur at home as it did in Indonesia.
Should the regime lose all or some of its power, Chinese might have wor-
ried that they would be seen as convenient scapegoats for people’s anger.
Second, the Chinese business community benefited enormously from
Mahathir’s protective policies and the economy’s rebound in 1999. As a
consequence of the NEP, Chinese businesses have forged close alliances
with Malay elites (both political and economic elites) and so the Chinese
business community’s interests align with their Malay counterpart’s in
maintaining the status quo if it is working to their benefit economically.
More on this issue is discussed at the end of the chapter. The third pos-
sible reason for Chinese support might have been the fear of UMNO
and PAS’s continual race to promote pro-Malay, pro-Muslim rhetoric. If
the Chinese were to help put UMNO back on sure footing, maybe the
party would stop trying to outbid PAS on Malay and “Islamic” creden-
tials and issues.
Yes, some of those involved in the reformasi movement were certainly
Chinese, but BN’s continued electoral support was in part due to votes
from Chinese constituents.
118 ● Political Change and Consolidation

Malaysian Politics Since 1999


After the 1999 election Prime Minister Mahathir and BN continued to
face political challenges at the polls. In three by-elections, the ruling
coalition won two of the votes but lost a highly contested third election
for the state seat of Lunas in Kehad to a BA candidate.30 Meanwhile, BA
continued to gain support, although fissures in the coalition also started
to emerge. When PAS announced that it would implement kharaj
(a land tax for non-Muslims) in states under its control, it was met with
loud protests from fellow coalition party, the DAP. PAS dropped the tax
and the two parties agreed to continue working together. Popular
protests continued sporadically during the year and were met by strong
police measures. In addition, Anwar’s supporters and opposition leaders
were harassed. Karpal Singh, one of Anwar’s attorneys, was charged with
sedition for suggesting a political conspiracy while arguing Anwar’s case
before the courts. A Keadilan vice president was charged with sedition
for his allegations about UMNO’s role in the 1969 race riots. Zainur
Zakaria, also one of Anwar’s lawyers, was sentenced to jail for contempt
in pleading his client’s case.31
In 2001 Prime Minister Mahathir was able to turn things around for
UMNO. First, BN was able to win the off-year elections held in 2001 by
more comfortable margins. While a reconsolidation of power was well
underway before the terrorist attacks of 9/11, the global sentiment
against militant Islam further strengthened his position. After 9/11
Mahathir was able to use the attacks to further boost his own position as
leader of a modern Muslim state that respected and allowed religious
freedom to marginalize more radical Islamic forces within Malaysia, such
as PAS. Anwar and the reformasi campaign fell out of the spotlight in
2001, both because the government dropped the remaining criminal
charges against him (four on sodomy and one for corrupt practice) and
because the High Court dismissed his defamation suit against Mahathir.
Also, the BA coalition fell prey to internal fighting. BA had always been
disadvantaged by a lack of access to the mainstream government-
controlled media and surveillance and censures and harassment of sup-
porters, but the arrest and detention of four high-ranking Keadilan
leaders also weakened the opposition movement. Finally, in September
2001, the DAP split with PAS over the latter’s renewed calls to turn
Malaysia into an Islamic state.32
While Mahathir was busy burnishing his Islamic image by stating that
Malaysia was an Islamic state (an issue that caused much concern within
and outside of the country), he also took very strong measures against
Malaysia ● 119

Islamic extremism. Among other actions, the government put on trial


nineteen members of the al-Maunah cult, who had pulled off an arms
robbery from an army camp in 2000. The trial ended with the leaders
receiving the death penalty.

Thirteen Muslims, many from PAS, including the son of its Chief
Minister in the state of Kelantan, were arrested under the ISA. The gov-
ernment described them as members of Kumpulan Militan Malaysia
(KMM), an extremist group that it accused of masterminding robberies, the
bombing and arson of three churches during the year, as well as murder.33

While arrests made under the ISA were unpopular and often subject to
criticism, this time the uproar was muted by a more militant line taken
by PAS who called for a jihad against the United States for the bombings
in Afghanistan. Mahathir and UMNO also criticized the United States’
actions, but Mahathir was careful to criticize those who advocated either
violence against the United States or even a boycott of American
products.34
In June 2002 Mahathir announced that he would be resigning the
following fall. Deputy Prime Minister Abdullah Badawi would replace
him as head of UMNO and as prime minister. Also in June 2002 PAS’s
leader Fadzil Noor died and Keadilan was further weakened by more ISA
detentions. Mahathir’s announcement was strategic in that the Malaysian
economy was looking strong and the effects of the economic crisis seemed
to be firmly behind him. Anwar was in jail and neither UMNO’s
elections nor the general elections were due imminently. When Abdullah
took over in October 2003, Malaysian politics were basically stable but
he saw his immediate job as healing the domestic divisions of the past
five years and preparing for UMNO elections in 2004 and for the
parliamentary elections after that.
During his first year in office Abdullah tried to pursue an agenda full
of political reforms. He advocated adopting good governance measures,
strengthening political institutions such as the judiciary, and improving
human rights protections. He also took a vigorous approach to corrup-
tion, issuing a number of indictments and creating the National
Integrity Plan (NIP) to reduce public graft. He created an independent
police commission and canceled several large expensive projects. These
efforts resulted in a strong electoral showing in the March 2004 elections.
BN won 90.8 percent of the parliamentary seats and recaptured
Terengganu, one of the states led by PAS. Opposition parties suffered
severe defeats. PAS won only one-quarter of the seats that it won in
120 ● Political Change and Consolidation

1999, and Keadilan had a miserable showing, winning only one seat in
parliament for leader Wan Azizah. The results seem to signal an end to the
multiethnic opposition coalition’s genuine challenge to BN supremacy.
Abdullah took all the coalition’s power away by adopting the mantle of
reform.35 However, few of his progressive ideas have been adopted and in
trying to transform the political system he inherited from Mahathir,
albeit perhaps only tinkering around the edges, he may be confronting
an entrenched UMNO elite who are unwilling to see change happen.
UMNO party elections were held in September 2004. While
Abdullah and his Deputy Prime Minister Najib Razak were uncontested
for their positions, several other key posts were to be decided. The vot-
ing did not go in Abdullah’s favor. Party elites were voting for three vice
president positions (of the party) and for twenty-five Supreme Council
members. Three cabinet members as well as seven deputy ministers, all
allies of Abdullah, were defeated. Many of his supporters were pushed
out of the Supreme Council. New members chosen were generally well-
connected to Mahathir or to Deputy Prime Minister Najib.36 Abdullah
may truly be facing challenges on all fronts. From within his own party
there are clearly forces that will resist change. From outside of UMNO,
opposition groups and voices could continue to get a boost from Anwar’s
release from prison in September 2004. While Anwar cannot run for
office until April 14, 2008 (unless he gets a royal pardon for his corrup-
tion conviction), he is becoming more politically active and will
certainly impact Malaysian politics without even running for an official
position. UMNO has said several times that Anwar will not be readmit-
ted to the party, but this could change in the future. He could also align
himself with his wife’s party, Keadilan, or with PAS. He is talking
politics and about the compatibility of Islam and democracy, and is
openly calling on Abdullah to push reforms forward even if this alienates
some stalwarts within UMNO.37

Prospects for Political Reform?


Given the events of the last eight years, what are the prospects for polit-
ical reform in Malaysia? What might need to happen in order for change
to really take root? Throughout this book, the economic crisis of
1997/98 has served as a catalyst for reform movements and reform-
minded leaders to outmaneuver status-quo politicians. As has already
been discussed, while the financial crisis hit Malaysia in a manner simi-
lar to Indonesia, Thailand, and South Korea, one important aspect of the
crisis was missing in Malaysia—the dictates of the IMF. Without the
Malaysia ● 121

IMF looking over his shoulder, Prime Minister Mahathir could make
economic policy decisions that the global financial community and some
within his own government frowned upon. When the more “liberal”
policies tried by Anwar did not produce improved economic conditions,
it opened the door for Mahathir to sideline Anwar and his supporters
and eventually remove him entirely.
One of the things that this book argues is that political reform or
democratization is often an elite-driven process. While elites are empow-
ered by mass movements and popular support in one form or another, in
all of the countries in this volume, elites within the highest circles of
power and those within civil society play an enormously important role
in making political reform happen. In Indonesia Suharto’s closest allies,
including military and police officials, ultimately agreed that he needed
to step down. In Thailand the contest was between political elites who
favored passage of the new constitution and stalwarts who did not and
the former were able to trump the latter. In South Korea political
alliances among candidates and elite responses to the economic crisis
helped usher in a new administration at the close of 1997. In Malaysia
elite dynamics moved in the opposite direction. Instead of forcing
change and reform, Mahathir and his allies strengthened their position
by ousting those who might have opted for political change.
Political reforms come about when there is a confluence of factors.
When internal pressure from political elites combines with popular
protests and/or pressure from civil society groups and when external factors
such as international investors and the IMF favor reform-minded elites and
changes, then we are likely to see change. These factors all coalesced in
three of the countries studied here, but not in Malaysia. Now that the
economic crisis has fully passed, and Mahathir has retired, might
Malaysia join the ranks of more democratic Asian countries? I think it is
possible, but not likely in the short term.
Voices for reform in Malaysia include those of opposition parties such
as DAP and Keadilan and possibly PAS. While there is the potential for
these parties to win more seats in state and national parliaments, lately
they have been weak and unpopular. There are also a large number of
civil society organizations that would like to play a greater role in keep-
ing the government accountable and honest. However, NGOs are greatly
constrained in what they can do to check the power of the state. An array
of restrictive laws curtails freedom of expression, association, and assem-
bly. This makes it difficult for NGOs or civil society organizations to try
and publicize their activities and gain broader support for particular
causes.
122 ● Political Change and Consolidation

Opposition parties and civil society groups continued to express concern


that police were not impartial in granting permits for public assemblies
and used unnecessary or excessive force when dispersing demonstrations.
In February, without giving sufficient warning, police fired water can-
non laced with chemical irritant to disperse a crowd gathered at the
national police headquarters in Kuala Lumpur to present a memorandum
on police brutality.38

Without real freedom of assembly, freedom of the press, and freedom of


speech, it is hard to imagine that civil society organizations will be able
to mobilize enough people or get their message out broadly enough to be
the agents of a political revolution from below.

Role of Islam
Can Islam be a force for change within Malaysia or is it one of the forces
impeding change? While there is a lively debate within both academia
and the mainstream press about the compatibility of Islam with democ-
ratic institutions and values, Indonesia has shown that Islam can not
only coexist with democracy but can also be one of the forces or actors
that help democracy evolve. During the economic crisis, religious lead-
ers were among those calling for Suharto to step down and stating the
need for democracy and greater tolerance and ethnic/religious harmony.
Is Islam a similar force in Malaysia today? Yes and no.
PAS, the Partai Islam se Malaysia or the Pan-Malaysian Islamic Party,
was formed in 1950 because of a split within UMNO over the role of reli-
gion in politics. It has played an important role in criticizing UMNO and
questioning the credibility (on religious and ethical grounds) of leaders
such as Mahathir.39 PAS’s party platform has varied somewhat in the recent
past. In 1999 it muted its long-standing call for an Islamic state based on
sharia (Islamic law); it did so in order to keep the opposition coalition with
DAP and Keadilan in tact. More recently, PAS has renewed its call for
Islamic law and has suffered from the media’s portrayal of it as a radical
group, and the mainstream press has tried to implicate PAS members as
working with more militant groups such as al-Maunah.40 There is little evi-
dence that PAS is linked to violent Islamic groups either in Malaysia or out-
side the country. However, some of its members have made inflammatory
statements supporting Osama bin Laden and al Qaeda against the United
States and in opposition to the idea of a secular state.
PAS has had the chance to rule in Terengganu and Kelantan and an
analysis of what it has tried to do there presents us with a mixed impression
Malaysia ● 123

of the party’s commitment to democracy. PAS tried to implement hudud


(Islamic punishment for certain criminal offenses) law in Terengganu,
only to have the federal government forbid this. These laws would only
apply to Muslims and “party spokesmen went to great lengths to empha-
size that non-Muslims had not been unfairly treated under PAS in
Kelantan, with freedom of religion guaranteed and non-Muslims even
allowed to continue such practices as rearing pigs.”41 However, PAS has
also advocated a land tax on non-Muslims, again making many non-PAS
supporters fear what life would be like under PAS leadership. For the
most part, non-Muslims in Terengganu and Kelantan have been able to
maintain their way of life and their businesses with only minimal intru-
sions. Alcohol and gambling have been curtailed but if in non-Muslim
hands liquor has been allowed to be purchased, sold, and partaken of.
Like other organizations, PAS members vary considerably in their
commitment to democracy or democratic values. In the spring of
2005 PAS elected reformist leaders to top posts, shunning hard-line cler-
ics. Academic-turned-politician Nasharudin Mat Isa was elected the
party’s deputy president and three other reformists were named
vice presidents of the party. This is a historic first for the party since the
three vice presidents are not Islamic scholars but intellectuals or activists.
This shift toward more moderate leadership within the party comes
about because of electoral setbacks in the 2004 election. The party’s sup-
port comes mainly from areas in the north and people seem to support it
mostly out of frustration with UMNO and BN, rather than as a way of
expressing devotion to the idea of an Islamic state. 42 Realizing this, PAS
seems to be taking a more moderate approach right now.
Despite its usefulness and power as an opposition force to UMNO and
the BN coalition, I think it would be wrong to see PAS as a potential force
for democratic change. Not because Islam might not be compatible with
democracy, but because it would be almost impossible for PAS to rally sup-
port to win more electoral contests based on a moderate and tolerant vision
of Islam. UMNO has already co-opted Islam for just this purpose.
Mahathir first started emphasizing the importance of Islam in the 1980s
and Prime Minister Abdullah has spoken a great deal about “Islam
Hadhari” or “civilizational Islam.” In his vision, Islam is a force for
tolerance of religious differences, individual piety, and most of all increased
scientific progress and Islamic modernism. For PAS to stake out religious
space different from this, the party is almost forced to move to more tradi-
tional and more rigid conceptions of Islam. This makes it both less appeal-
ing to the vast majority of Malays and Malaysians and also moves it away
from the values necessary to promote and sustain democracy.
124 ● Political Change and Consolidation

Second, it is hard to see PAS as a force for democratic change when


we compare them to the Islamic forces that helped oust Suharto in
Indonesia. In Indonesia large Muslim organizations such as
Muhammadiyah and Nahdlatul Ulama are huge grassroots organizations
involved in education, healthcare, and community services throughout
the country. The organizations also have links with Muslim and secular
political parties. Leaders of these movements (such as Gus Dur and
Amien Rais) became increasingly critical of Suharto as economic condi-
tions worsened and as protests throughout the country escalated. Since
these organizations have deep roots throughout society and because they
were part of the political process already but not as part of Suharto’s rul-
ing apparatus, their criticism of the regime carried a great deal of weight
and legitimacy. Untainted by having to take responsibility for governing
(like PAS in Kelantan and Terengganu) but able to speak with moral
authority about ethical policies and the need to root out corruption,
which had rotted Suharto’s government through and through,
Muhammadiyah and Nahdlatul Ulama were well-positioned to rally
people against Suharto. PAS neither has the depth nor the standing to
act in this capacity and since it is a political party, its present aim is to
win more seats within the current system and not necessarily to topple
the whole institutional apparatus.

Abdullah: Reform-Minded Leader?


If one looks at the history of democratization in Asia, one of the most
necessary (but by no means sufficient) ingredients for political change
has been having a reform-minded leader come to power. From Taiwan to
South Korea and Indonesia, there is no question that the people at the
top and the decisions that they made have had profound effects on the
extent to which political reforms and democratization have gone forward.
In Indonesia, political reform began when Suharto resigned, then
B.J. Habibie opened the floodgates to massive change when he allowed
new political parties to form and to compete in the most open and hotly
contested elections in that country since the 1950s. Certainly, Habibie
hoped that he would be the beneficiary of these changes, but when he
was not, he played by the rules and stepped aside. There is a great deal of
political science literature on transitions to democracy that focuses on
the contests among elites within power for leadership. Huntington,
Pzeworski, and others describe the end of authoritarian regimes as occur-
ring when reform-minded leaders outmaneuver or sideline hard-liners in
power. This comes about when moderates in power decide to throw their
Malaysia ● 125

weight behind those seeking greater changes or democratization. What


I have found in Asia after the economic crisis is basically consistent with
this literature. Variables such as IMF pressure, popular protests, and
pressure from groups in society such as the business community or from
the military simply impact the coalitions and degree of power of elites at
the very apex of power. Because of these pressures or dynamics, more
moderates and perhaps even some hard-liners swing over to support
reform-minded players and so change is able to happen.
So, might Abdullah Badawi be able to be the reform-minded leader
that Malaysia needs to bring about political change? While he seems to
personally favor change and wants to at least tinker at the margins to
clean up politics and improve the transparency and accountability of
UMNO and BN, he has not shown the ability to convince other UMNO
elites that his agenda is the right one. Too many players have vested
interests in the current system and want to maintain the power and eco-
nomic clout in their own hands. I can envision a scenario where Anwar
rejoins UMNO43 and either allies with Abdullah and helps the current
prime minister become the leader of more robust reforms or outmaneu-
vers him. Anwar could then replace Abdullah as head of the party and as
prime minister. In order for this to happen within UMNO a cohort of
reform-minded party officials would have to come to the forefront and
begin the process of real political change. For now the chance of this is
small but not impossible.

Other Obstacles to Change


In Indonesia, Thailand, and South Korea the middle class and business
interests (supposedly the backbone of groups in civil society) supported
political reforms in the period after the economic crisis. This was not the
case in Malaysia. While it has already been mentioned that analysis of
voting patterns in 1999 showed wide Chinese support for the BN coali-
tion, there needs to be a fuller discussion of business interests in
Malaysian politics. Since the passage of the NEP in the early 1970s,
Malaysian business has been closely tied to the state. The NEP was
a massive affirmative action campaign to redistribute wealth, jobs, and
corporate control to ethnic Malays. Prior to the NEP, it was widely
understood that capital not in foreign hands was mostly controlled by
ethnic Chinese and that they dominated the economy. After the NEP,
Chinese businesses were forced to form partnerships with Malays, hire a
certain number of Malay employees, and do business with Malay com-
panies (not just with other Chinese companies). These policies had the
126 ● Political Change and Consolidation

effect of bringing in a great deal of government involvement in the econ-


omy. It was really through the NEP that state-led economic growth
became entwined with the idea of helping Malays get a leg up.44 Malay
companies with close ties (and financing connections) to UMNO were
set up to partner with Chinese businesses to fulfill the NEP require-
ments.45 So, by 1997 many businesses and business leaders, Chinese,
Malay, and Indian, had close associations with BN politicians or their
friends or relatives.46
Given that the political system is designed to maintain Malay politi-
cal dominance, why were the Chinese and Indian communities not more
active in the political protests and the reform movement in 1997–1999?
Not only were the Chinese not significantly represented in the protests,
Malaysian Chinese seemed to stay home during the protests. The most
logical explanation for this is that the Chinese (both business elites and
people of more modest backgrounds) feared the instability could lead to
violence against non-Malays. Malaysian Chinese were appalled at the
riots and assaults against Indonesian Chinese, which occurred in
the spring of 1998, and while such violence seemed unlikely in Malaysia,
the Chinese had good reason to prefer the status quo to the potential for
chaos.47 So, with economic, personal, and security interests at stake, the
Chinese in Malaysia seemed to opt for continued BN rule, not the alter-
native coalition opposing Mahathir.

Conclusion
For now Malaysia is far from democratic. The political system is set up
to favor Malay dominance and the continued power of the ruling coalition.
Most of the large media outlets are fully or partly owned by one of the
parties in the BN. NGOs are constrained in their activity by laws that
limit assembly, speech, and association. The judiciary is in need of
reform and greater independence. Having said that, there are regular and
competitive elections and opposition parties do compete in the process.
Given the experiences of Malaysia’s neighbors, one would hope that it
will not take an economic crisis to bring reforms to the system. There is
another possibility for change in Malaysia. Former deputy prime minis-
ter Anwar Ibrahim is out of prison and is talking politics. He is critical
of Abdullah’s administration and of the race-based nature of Malaysian
politics. Anwar is forbidden from running for office until 2008. Despite
this prohibition, he is speaking loudly about the need for reforms and
this may empower other people to criticize or challenge the status quo.
We do not know if he is truly a reformer, someone who would open up
Malaysia ● 127

the system and change the structure and rules of the game, but he may
have the charisma and clout to do so.
Because the pressures for reform were different or lacking in Malaysia
than in Thailand, South Korea, and Indonesia in 1997/98, ruling elites
were not forced into reforms. If political elites, Anwar or someone else,
initiate reforms from a position of internal strength, democracy in
Malaysia may in fact look very different from democracy in other Asian
countries. Perhaps it would look more like Japanese politics, with a dom-
inant party in power and strong government guidance in the economy,
rather than the newer democracies such as Indonesia where no party is
dominant, or South Korea and Thailand where personal charisma matters
more than institutions such as political parties. For now it is too soon
to tell.
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Conclusion

N
o democracy is perfect or ideal. Even long-standing democracies
such as the United States, Great Britain, and the countries of
Western Europe have scholars, politicians, and citizens arguing
about the fairness of the system, better ways of conducting elections,
improving political representation, and the problems of money politics
and patronage. The countries examined here, Thailand, South Korea,
Indonesia, and Malaysia, have less experience with democracy and
arguably have further to go in achieving a more just, fair, and represen-
tative political order for their citizens. Despite a great deal of optimism
and effort from a lot of people, the promise of cleaner, fairer government
has not been fully achieved in Thailand, South Korea, or Indonesia.1
Having said this, all three countries, especially Indonesia, have made
tremendously positive changes in their political systems over the last
eight years and although there are institutional, cultural, and economic
changes that should be made to improve politics, the chances of rever-
sion to authoritarianism are small. One cannot state often or strongly
enough what a positive development that is! How well do the
experiences of these three countries conform to the ideas laid out in
the theoretical literature on democratic transitions and consolidation?2
How fully has democracy been consolidated and what problems still
exist in Thailand, South Korea, and Indonesia? Do problems with
democracy (high levels of corruption, e.g.) necessarily mean that democ-
racy is not consolidated? Finally, from looking at these countries, what
conditions might need to exist in Malaysia in order for democratization
to take hold? These are the questions that this conclusion to the book
will assess.
The introductory chapter plus the individual country chapters iden-
tified the 1997–1998 financial crisis as a pivotal event in understanding
political reforms and democratization in Asia. All four of the countries
discussed shared the painful experience of the economic meltdown
130 ● Political Change and Consolidation

beginning in the summer of 1997. To varying degrees, Thailand, South


Korea, Indonesia, and Malaysia all faced the loss of investor confidence,
runs on their currencies, and significant banking crises. All of the countries
except Malaysia felt compelled to turn to the IMF and the international
community for bailout packages to stabilize their economies. All four of
the Asian leaders came under tremendous pressure from different actors
at home—protestors, business groups, and from some political elites in
significant positions of power—and there was pressure from the interna-
tional community to enact certain neoliberal monetary and fiscal poli-
cies.3 All of the leaders, except Malaysia’s prime minister Mahathir, were
swept out of office as a direct consequence of the crisis; President Suharto
and Prime Minister Chavalit were forced to resign, and President Kim’s
party lost the elections held at the end of 1997.

Case Study Conclusions


Thailand’s twentieth-century political history is checkered with periods
of political reform and movements toward democracy and periods of
more repressive or authoritarian rule. In 1997 when the economic crisis
hit, Thai politics could be best characterized as semi-democratic. There
was a partially elected legislative branch and an elected prime minister,
but money politics and corruption dominated elections and there was
little sense of leaders being accountable to citizens. In addition, the gov-
ernment was unstable and weak at policy making. Prime Minister
Chavalit was the third leader in as many years, cabinet shuffles were
endemic, and parliament was not known for decisive action. Elections in
the 1990s were seen as corrupt affairs dominated by money politics, vote
buying, and ballot-box stuffing. Although the military had largely
stepped aside from regular politics, many generals and former generals
had seats in parliament and in the senate. A movement for political
reform had begun several years earlier and by the summer of 1997 there
was supposed to be a draft of a new constitution on the table. Debates
and revisions to the charter were still raging when the financial crisis
hit in July. Although there was already a great deal of popular support
for trying to clean up and improve the system, there were many politi-
cians who had no interest in changing the status quo, thus it was far
from clear that the constitution would get a fair hearing and ever come
to pass.
As the Thailand chapter shows, the constitution did pass, in large
measure because supporting it became the most tangible thing that people
(protestors, civil society groups, and politicians) could do to try and
Conclusion ● 131

prod the government toward more responsible action in response to the


economic crisis. Prime Minister Chavalit had replaced members of his
cabinet in response to the crisis, but his government seemed totally
unable to enact a set a policies to address the economic problems plaguing
the country. People’s anger at this became channeled into support for the
new constitution. The king indicated his support for reform, and some
in the military also put pressure on Chavalit to finally agree to support a
vote on the charter. Once the new constitution was approved, Chavalit
was all but a lame duck. He resigned in early November 1997. Chuan
Leekpai took over as prime minister. Between early 1998 and when elec-
tions were held in 2001, many of the provisions of the charter were put
into place. There were new electoral laws and new oversight bodies to
monitor and try and ensure fairness in the system. Both the 2001 and
the 2005 elections were viewed as free and fair, but they also continued to
suffer from money politics and allegations of illegal campaign activity.
Thaksin won both the 2001 and 2005 elections by significant margins.
The chapter on Thailand concludes that it had an opportunity between
1997 and now to make significant progress on cleaning up the political
system, making it fairer, more transparent, and more accountable to cit-
izens. While new watchdog bodies such as the election commission, the
anticorruption commission, and the constitutional court should serve to
spot abuses and antidemocratic behavior, the commissions have been all
but emasculated. Thaksin pressured these institutions and packed them
with supporters. Changes to the voting system and to the parliament
have succeeded in bringing a measure of stability to Thai politics, but it
has not served to help bring more honest people into politics. Thaksin’s
popularity through 2005 allowed him to substantially erode civil liber-
ties and freedoms in the name of promoting security and economic
development.4
The change in 2006 came through protest activity, not through insti-
tutional processes. Hence, Thai politics successfully underwent reform
in 1997, but it is still at the edge of consolidating democratic changes
to create a more open, accountable, transparent, and fair system to pro-
tect and advance citizens’ rights, and preferences. A variety of views
need to be represented and civil rights and media freedoms need to be
protected.
South Korea is perhaps the country where democratization has been
most successful.5 Democracy began in 1987 when military general Chun
Doo Hwan’s handpicked successor Roh Tae Woo agreed to a series of
reforms to open up the political system. He agreed to all of the following:
direct presidential elections, allowance of multiple candidates to contest
132 ● Political Change and Consolidation

elections, creation of multiple political parties, a free press, protection of


civil rights, and local elections (among other measures). Roh complied
with the reforms and ran in the first truly competitive presidential
election in 1988. He won when Kim Young Sam and Kim Dae Jung split
the opposition votes. The reforms created a system where fairly free and
competitive elections took place, there was a free and vocal press, people’s
rights were respected, but money politics and corruption robbed the
system of real transparency, accountability, and fairness.
From 1987 to 1997 there was a gradual transformation of the politi-
cal system. When the economic crisis hit in the fall of 1997, most
people viewed South Korea as a functioning democracy. However, the
Korean political system was still far from being fully democratic. Big
businesses, the chaebol, had disproportionate influence over economic
policy making, and money had a deterministic effect on elections and
on which candidates made it far enough to run with a chance of
winning. When Kim won the presidential election in the midst of the
economic crisis in December 1997, he was given an opportunity to
overhaul both politics and the economy. Unfortunately, he was not
entirely successful.
He accomplished more on the economic side than on the political
side. He was able to restructure some of the chaebol in the worst finan-
cial shape and created some oversight bodies to guard their financial and
management practices. However, he was not able to change the presi-
dential system to more of a cabinet system with a stronger prime minis-
ter (something he had offered to Kim Jong Pil to get him to form the
alliance in 1997). Kim tried to argue that such a shift would create more
of a balance of power between institutions and help in policy making.
Because his party did not control the legislature, he was unable to get
these political changes through. With the election of Roh Moo Hyun in
2002, hopes were again high that political reforms might be back on the
agenda. But, he too was quickly stymied by a divided legislature where
he did not have a great deal of support and by charges that his neophyte
administration was incompetent. The forward momentum for political
reforms was quickly squashed.
So, what is the status report for Korean democratization? It clearly
meets the procedural and qualitative elements that Dahl spells out as
necessary to consider a country “democratic”; there are free, fair, and fre-
quent elections, elected officials, freedom of expression, alternative
sources of information, associational autonomy, and inclusive citizen-
ship.6 However, corruption both erodes people’s confidence in the sys-
tem, their sense that politics is fair and is a representation of popular
Conclusion ● 133

will, and harms the government’s ability to pass and implement policies
of good governance. South Korea’s corruption score, as calculated by
Transparency International, is a 4.5, where 10 is the cleanest and 1 the
most corrupt a country could score. South Korea ranks in 47th place out
of 145 slots (there are more than 145 countries in the list since some
countries share a spot with a tied score) listed; this puts the country
behind South Africa and just ahead of Seychelles.7 Corruption in Korea
manifests itself in close ties between businesses and politicians and in the
habit of politicians of having family members and/or friends take advan-
tage of political ties to win business contracts with well-connected busi-
nesses. Attempts to thus make the political economy more transparent
and to hold elected officials accountable for their actions and those of
their associates would improve democracy.
In 1997 Indonesia was clearly an authoritarian regime. Suharto kept
a tight rein on the formation and activity of political parties, elections
were a tool for perpetuating his power, there was little freedom of the
press, civil society organizations were weak and mostly apolitical, and
the legislature was a rubber stamp for Suharto and his allies. The military
occupied a privileged position in politics, the economy, and on issues of
internal security. Today this has changed completely. The military has
been removed from formal politics, there are dozens of political parties
competing in mostly free and fair elections, and elections are held at
both the national and local level. While the executive branch is still more
powerful than the legislative branch, the legislature certainly cannot be
counted on to blindly support the president, and it has acted as a check
on presidential power. This was clearly the case when they impeached
President Wahid. The press is by and large free and some outlets can be
counted on to be critical of the regime. Civil society has exploded and is
increasingly trying to influence political decisions.
These enormous and far-reaching political reforms came about as a
direct result of the economic crisis. The crisis called into question
Suharto’s position and legitimacy. He had staked his regime on the
promise of economic growth. The financial crisis illustrated the corrup-
tion and inequality that was at the heart of his economic development
strategy. The IMF conditions for the bailout money required Suharto to
take measures that both angered his allies (ending monopolies in some
industries and closing insolvent banks) and the masses (reducing fuel
subsidies). When protests escalated in the spring of 1998, even his
closest military and business associates decided that it was time for him
to go. His resignation in May allowed B.J. Habibie to preside over some
of the most far-reaching political reforms within the whole region.
134 ● Political Change and Consolidation

Between May of 1998 and 2004 sweeping legal and institutional reforms
transformed Indonesia into a vibrant democracy.
However, as the chapter on Indonesia makes clear, there are lingering
problems in the country that I think prevent a further consolidation of
democracy. Problems include territorial and sectarian violence, an
extremely weak judiciary, corruption, and unresolved issues about political
Islam. These are hardly small or easy problems to tackle, but until indi-
vidual security is assured, either in contested areas such as Ambon or
Papua or for religious or ethnic minorities, it is hard to argue that full
democracy exists. To solve Indonesia’s problems will require further
weakening the military and entrenched economic and political elites
who benefit from the current arrangements. It does not seem likely that
this will happen in the near future.
Malaysia is the most stable and least democratic of the countries stud-
ied here. Prime Minister Mahathir avoided the fate of his neighboring
leaders in 1997/98. He was able to stay in office partly because he
refused to go to the IMF for help; thus, he could enact economic policies
such as pegging the ringgit and making it nonconvertible, which other
Asian economies could not do. He was also able to remain in power
because he outmaneuvered and had arrested his main rival, Deputy
Prime Minister Anwar Ibrahim. Arresting Anwar, however, triggered the
largest protests in recent history and for a brief while in the fall of 1998
it seemed that Mahathir too might be vulnerable. Business and UMNO
elites maintained their support for him, minority communities quietly
supported the status quo, and as the economy recovered, some of the
steam was taken out of the protests.
Mahathir was able to stay in office until he retired at a time of his own
choosing; Abdullah Badawi took over from Mahathir in October 2003.
Mahathir felt able to step down because the economy was clearly on the
rebound, the global war on terror gave him credibility in attacking the
key opposition party Partai Islam se Malaysia (PAS) for advocating
Islamic law and in cracking down against militant Islamic groups (and
others) in the name of security. Anwar had been convicted and was in
jail, and both UMNO party elections were far away enough for Abdullah
to have the time to gather support. Since taking power, Abdullah has
talked about political reform but has done little. Anwar was released
from jail in the summer of 2005 and immediately began criticizing
Malaysian politics. He cannot run for office until 2008 but is already
lambasting UMNO and the political system as one that perpetuates race
and class divisions. It seems unlikely that Anwar will pose much of a
threat to the current regime, at least in the short term. However, it is
Conclusion ● 135

possible that over the next few years the political system could undergo
a transition, not unlike the one that occurred in South Korea or Thailand.
For this to happen, there would need to be a crack in the door somehow,
a reform-minded leader would have to decide that it was in his or her
best interest to change the political system so that it is not so rigged in
UMNO’s favor, and would have to allow for the easier formation of
other political parties, media outlets, and public gatherings. These
things are not hard to imagine in Malaysia, but they do not exist in a
meaningful way at this point in time.

Applicability of Case Studies to Theoretical Material


This part of the conclusion will apply the information from the country
studies to three theoretical areas: the relationship between economic
crises and political change; understanding how and why political
reforms or democratization happened in some countries in Asia and not
in others; and the degree of democratic consolidation today in countries
with positive political reforms in the wake of the financial crisis.

Relationship Between Economic Crises and


Political Change
The book’s introduction gave an overview of the literature on economic
crises and political change. There are variations in findings about the
relationship between economic crises and political change (instability or
durability of the system, e.g.) of any sort—Raymond Duch, Karen
Remmer, and Mark Gasiorowski find that a number of variables (not just
the presence of an economic crisis) influence regime change. In Asia in
1997/98 the financial crisis was, without question, an important catalyst
for political change. The basic elements of the economic crisis were sim-
ilar throughout the region. There was enormous downward pressure on
countries’ currencies; banking liquidity crises impacted all of the coun-
tries mentioned in this book. Inflation was less of a problem,8 but mas-
sive loss of confidence from domestic and international investors was a
crucial element of the crisis. The financial problems triggered mass
protests in all three of the countries and in Malaysia, Hong Kong, and
the Philippines as well. Indonesia suffered the worst violence from the
protests. Of the countries studied here, all of the countries except
Malaysia turned to the IMF for assistance. Going to the IMF for a
bailout can have several political and economic consequences.
Economic consequences are easy to understand. In exchange for a
large bailout package the IMF generally requires countries to enact a set
136 ● Political Change and Consolidation

of tight monetary and fiscal policies. Governments are told to cut


spending, particularly on subsidies, and to crack down on insolvent
businesses by tightening up bankruptcy laws and loosening laws on
foreign ownership so that insolvent or near-bankrupt companies or banks
can be “saved” by foreign investors. Measures such as these are meant to
increase investor confidence and to put the government back on surer
financial and monetary footing. These policies, however, can also backfire.
For example, when Suharto closed a number of insolvent banks, there
was massive panic and investors and depositors rushed to take their
money out of all banks, assuming that their bank might be the next to be
shut down. Political consequences of an IMF bailout are more complex.
Sometimes leaders see the IMF as a convenient scapegoat, an actor to
blame for enacting policies that they might want to choose anyway but
which they know will be unpopular.9 They may try and point fingers at
the IMF, trying to deflect blame for unpopular policies. Smith and
Vreeland find some evidence that this can help leaders stay in office, and
it seems particularly true if the leader came into power with the IMF
agreement already in place.10
During the 1997/98 crisis turning to the IMF also changed internal
political dynamics within countries. Sometimes political elites differed
on policy preferences and attitudes about the IMF prescriptions. This
disagreement triggered competition for power, either electoral competi-
tion, for example, in South Korea, or a power struggle at the highest
levels of government, such as in Thailand, Indonesia, and Malaysia. The
economic crisis was directly responsible for setting off these disagree-
ments among elites. And, as the chapters on the countries showed,
I found that political reforms came about largely because of a loss of sup-
port for Suharto, for President Kim Young Sam’s party, and for Prime
Minister Chavalit. Loss of support happens both at the level of society
and the masses and at the elite level within circles of political power.
This would not have happened without the economic crisis; hence,
I find that the financial crisis, as detrimental as it was to people’s lives
and well-being, had a positive effect on helping set up the conditions for
political reform. Democratization in Asia largely conforms to the elite-
centered model of transition theorists such as Huntington, Przeworski,
and Schmitter and O’Donnell, as discussed in the introduction.

Why Do Reforms Happen in Some Places


and Not in Others?
Previous chapters have made the argument that political reforms
happened in Thailand, South Korea, and Indonesia but not in Malaysia
Conclusion ● 137

for several reasons.11 Three specific explanations will be offered here:


first, Malaysia was different because it did not go to the IMF for a loan;
second, business class interests largely maintained their support for the
regime; and lastly, there was an electoral outlet for disgruntlement, so
that anger toward the regime could be channeled to opposition parties,
however, because the political system is so rigged in UMNO’s favor, it is
almost impossible for another party to take power through electoral
means.
The first and second factors mentioned earlier are related and so they
will be discussed together. Prime Minister Mahathir did not turn to the
IMF for a bailout, and this turned out to be a critical decision. Without
outside interference Mahathir’s administration did not have the same
pressures from either the global community or other elites to enact poli-
cies that would hurt the prime minister’s power base. Disagreement
became obvious to everyone when Mahathir would say one thing and his
deputy Anwar Ibrahim would then try and reassure investors that the
prime minister was just blowing off steam. From winter of 1997/98
through the fall of 1998 when Anwar was sacked, policies veered from
“liberal”12 and restrained, the kinds of policies the IMF might have
prescribed had it been involved, to closed and protectionist (e.g., the
decision to restrict the convertibility of the ringgit). Ultimately,
Mahathir was able to marginalize Anwar and then have him arrested on
trumped-up charges of sodomy and corruption. Had the IMF been
involved in a bailout, there might have been greater support for Anwar’s
policies within the administration and it would have been harder
for Mahathir to push him aside. Second, because the IMF was not
involved, Mahathir was able to protect some of his closest economic
allies. Instead of going through the painful process of examining
the health of key Malaysian businesses and the wisdom of some
of the government’s large spending projects, Mahathir was able to pro-
tect his allies and help them recover and even profit from the economic
crisis.
In addition, ethnic politics had an impact on Mahathir’s ability to
stay in power and prevent political reforms from going through. A little
less than 30 percent of Malaysia’s population is ethnic Chinese. In the
past, most notably during the riots of 1969, the Chinese have been tar-
gets of Malay anger and frustration at economic inequality.13 Malaysian
Chinese watched in horror as Indonesian Chinese were blamed and then
attacked and even raped in the wake of the economic crisis. While there
seemed to be little danger of this sort of ethnic violence in Malaysia,
there was a sense that stability was far preferable to instability and the
unknown of regime change. Also, Chinese business elites, along with
138 ● Political Change and Consolidation

their Malay partners, were some of the prime beneficiaries of Mahathir’s


economic policies. Even if they were not afraid of chaos and ethnic
violence, the Chinese business community may have been predisposed to
support Mahathir instead of reformasi.14 These dynamics were different
from those in the other countries studied here. In Thailand, South
Korea, and Indonesia the business community, or at least sizable por-
tions of it, supported political reforms as a way of trying to stabilize and
restart the economy. In Indonesia Suharto clearly lost the support of the
Chinese business community when he was unable to protect them
(the police stood by and did little to stop the rioters and attackers) from
violence, nor was he able to stop the free fall of the economy. In the
spring of 1998 both the personal and economic interests of the Chinese
businesses in Indonesia were being destroyed. Certainly, some business
interests in Thailand and South Korea were hurt by IMF strictures, how-
ever, the need to halt the downward pressure on the economy made
enough of the business class in each country willing to support political
reforms. In Malaysia business interests of all ethnic groups were closely
aligned with the state. The business community’s political power may
have been more informal than formal in these countries. In other words,
business interests were channeled through both professional organiza-
tions and some interest group activity, but also through dense and unof-
ficial links between business and political elite. In Malaysia continued
support from these actors was an important element of the regime’s ability
to hold power.

Status of Democratization
The literature on consolidation of democracy focuses mostly on the sta-
mina and duration of democratic procedures and on the willingness of
leaders and citizens to both play by the rules of the game and to believe
that democracy is the best system. Going back to Linz and Stephan’s cri-
teria for democratic consolidation, South Korea, Thailand, and
Indonesia all seem to meet the behavioral elements of democracy. There
are no widespread, significantly powerful actors spending huge resources
to try and overthrow the democratic order.15 Linz and Stephan’s second
litmus test for democratic consolidation has to do with attitudes about
democracy. While it seems clear that democratic attitudes have taken
hold in Indonesia (turnout and support for national and local elections
have been high and people tell surveyors that they favor democracy over
other political systems),16 it is less clear that Thais and South Koreans
seem to value democracy over other systems or priorities such as social
Conclusion ● 139

welfare/economic well-being. Linz and Stephan’s last criterion has to do


with the institutionalization of rules and norms of obeying the law.17
I have interpreted this as an element of good governance and of a minimal
level of corruption. All three countries are lacking on this point. South
Korea has wrestled more with problems of corruption than has either
Thailand or Indonesia (despite a lot of rhetoric in both places about
cleaning up government). However, even South Korea suffers problems
of money politics and patronage, which undermine the credibility,
accountability and transparency of the system. Do problems with cor-
ruption mean that democracy cannot be consolidated? The answer is not
so clear cut. First, democratization, or the consolidation of democratic
reforms, is an ongoing process. Countries fall somewhere on a contin-
uum of very free and open politically to very closed and authoritarian.
Likewise, there are levels or degrees of corruption. If levels of corruption
are high enough that electoral outcomes are determined by bribes rather
than legitimate votes, or that politicians’ policy choices are determined
by narrow, wealthy interests, rather than by the interests of those who
voted them into office, then it would be hard to see such a political sys-
tem as being accountable to citizens in a meaningful way. Of course, the
reality is that most democratic countries are far from perfect and will fall
somewhere on a scale that measures fairness, accountability, and trans-
parency. For now, South Korea, Indonesia, and Thailand, all need to
better combat corruption because it does pose a significant challenge to
the legitimacy of democratic institutions.
This problem of good governance instead of corruption is a huge topic
in itself. Corruption may in some ways be harder to fix than reformers
anticipated in 1997/98. Democratic reforms were able to emerge in part
because they only hurt the interests of a small number of elites in power
who were wedded to the old order. Rooting out corruption affects a much
larger slice of the system, from low-level bureaucrats, police and military
officials, to high-ranking political and economic leaders. There are so
many people with something at stake that really getting rid of corruption
so embedded in the political economy is a huge task.
Some of the other factors inhibiting greater democratization are as
follows: a greater focus on the delivery of social welfare or economic
goods and new security concerns. Although the economic crisis of 1997
was an enormous blow to people’s well-being throughout Asia, anger
about the crisis was manifest in disgust with less-than-democratic polit-
ical regimes. Now that political reforms have gone through in places
such as South Korea, Thailand, and Indonesia, it is less obvious that the
political system is an obstacle to greater economic prosperity. While all
140 ● Political Change and Consolidation

Table C.1 Real GDP growth in percentages from 1997 to 2005

Country 1997 1998 1999 2000 2001 2002 2003 2004 2005

Thailand 1.4 10.8 4.2 4.8 1.9 5.3 6.9 6.1 5


South Korea 5 6.7 10.9 8.5 3.3 6.0 3.1 4.6 4
Indonesia 4.7 13.1 .8 4.9 4 4.25 4.9 5.1 5.5
Malaysia 7.3 7.4 6.1 8.9 .25 4.25 5.4 7.1 5

Source: Data from 1997 to 2000 is from the GDP, gross domestic product. Asian Development Bank, Asian
Development Outlook, 2001, and figures from 2003 to 2005 are from Asia Regional Information Center
(ARIC), Pacific Economic Outlook, www.Aric.adb.org. Data for 2001 to 2002 is from (Paul Aho. “The out look
for Asian Feed Demand.” USDA Agricultural Outlook Forum. Washington DC February 17, 2006 GDP,
gross domestic product.

four countries have rebounded from the crisis (table C.1; Indonesia’s
recovery has, not surprisingly, been the slowest), there has not been a
consistent resumption of the impressive levels of economic growth seen
before 1997 (prior to 1997 all four of these nations had consistently seen
economic growth rates above 7 percent).
Populations had become accustomed to significant improvements in
their material well-being every few years. In the eight years since the cri-
sis, this has not reoccurred. So, instead of focusing dissatisfaction on the
nature of the political system, people are making more demands that are
specific to social welfare concerns. Leaders such as Prime Minister
Thaksin, who make popular promises (and deliver on them), are able to
retain support even though they may be subverting the democratic sys-
tem in some (or many) ways.
Further democratization may also be stymied by external pressure on
governments to act more aggressively on security matters. While the
IMF may have inadvertently acted as a positive force for political
reforms, today the United States and the global community are more
concerned with security problems and terrorism than with corruption
and cronyism in our allies. South Korea is confronted with a nuclear
North Korea on its border and although successive leaders have pursued
an active policy of engagement with the North, the United States would
both like to see South Korea fall back into its orbit and also put more
pressure on the North to negotiate the monitoring of these weapons.
Because the United States is so concerned with the nuclear issue, it may
be less likely to fault the South Koreans about flaws in their democracy.
In fact, there have been no recent public statements made by the United
States about concerns over South Korean democracy.
Both Indonesia and Thailand have come under pressure from the
United States to take more aggressive actions against militant Islam.
Conclusion ● 141

The United States is concerned about Southeast Asia as a second front in


the war on terror and has actively sought support and action from countries
to crack down on militants in their own countries and to help prevent
regional Islamic organizations from networking and coordinating with
each other. The U.S. interest in stopping terrorism has led it to focus on
this at the expense of pressing countries to work through problems of
corruption and social/economic injustices, which may be contributing
to a failure to fully realize democracy.
Ultimately, I believe that democracy, although still grossly imperfect,
has been consolidated in South Korea but not in Thailand or in
Indonesia. South Korean democracy seems stable and able to stand up to
both political scandals and constitutional challenges. In Thailand it is
clear that democracy has taken root, yet Thaksin has shown how easy it
is to subvert the best-intentioned laws and regulatory bodies in the name
of security and economic growth. Indonesia faces the biggest challenges
relating to all of these significant problems (corruption, a need for good
governance, lagging economic growth, fragile political institutions, and
security threats). While it certainly appears as if political reforms will
stick in Indonesia, of all countries discussed here, it is the place most at
risk for overturning some of the new elements of democracy. The risk of
this is small, but it is not impossible to imagine small or moderate steps
being taken to reverse some of the new civil rights and accountability
measures enacted since 1998. This could be done in the name of secu-
rity, in the name of increasing economic growth, or in the name of Islam.
Therefore, I am hesitant to proclaim that democracy has been fully
consolidated in Indonesia as of 2005.

Final Thoughts
In countries where democracy has not taken hold, economic crises can
jeopardize the legitimacy of authoritarian leaders. This is especially true
for leaders who have staked their rule on the promise of economic
performance, as Suharto did. In countries that are partially democratic,
or that have previously made some political reforms, economic crises can
be the push that really changes the system, and this is exactly what hap-
pened in Thailand and South Korea. Economic crises can illustrate flaws
in the system and problems with leadership, and when people’s welfare
takes a turn for the worse, there needs to be a mechanism for penalizing
leaders responsible.
Counterintuitively, in the more recent waves of democratization,
financial problems do not appear to doom the odds of democracy
142 ● Political Change and Consolidation

surviving. Citizens are sophisticated enough to want to vote out incumbent


office holders, but not to want to overthrow the whole political system.
What this means for all political systems is that financial crises are bad
news for most leaders. Those who are seen to hold their offices through
legal–rational means, such as free and fair elections, may get voted out of
their position, but the system will probably survive. Those whose legiti-
macy is not based on fair and legal mechanisms will have to hope that
their support networks are wide and deep within the political and eco-
nomic elite. Outside pressure from global actors such as the IMF or
global flows of capital can affect political outcomes under circumstances
where there are some elites pushing for change and where citizens or
organizations can be mobilized for political action.
One last point that has not been made previously: it may be that
democratic countries are less likely to suffer from the type of economic
crisis that hit Asia in 1997/98. If the Asian economies and political sys-
tems were more transparent and accountable (to investors and interested
parties), some of the panic and contagion that contributed to the sever-
ity of the crisis might not have happened. Certainly, there will be eco-
nomic problems and maybe even crises in the future (high oil prices
make this frighteningly possible in the near future), however, if investors
feel they have accurate and plentiful information about government
spending and policies, as well as accurate information about private
businesses’ finances and interests, they may not be so quick to pull their
money out. Had this sort of speculative behavior not happened in
1997/98, the magnitude of the crisis would have been much less severe.
It is perhaps too soon to tell if the political reforms enacted after
1997/98 will have the effect of lessening the chance of a similar
economic crisis in future.
Notes

Introduction
“Economic Crisis and Political Change: Indonesia, South Korea, and Malaysia,”
World Affairs 166, no. 4 (2004): 185–196. Reprinted with permission of
the Helen Dwight Reid Educational Foundation. Published by Heldref
Publications, 1319 18th Street, Washington, D.C. 20036–1802. www.Heldrf.
org. Copyright © American Peace Society (2004).
1. N. Ganesan, “Malaysia in 2002,” Asian Survey 43, no. 4 (2003): 147–155.
2. Robert A. Dahl, “What Political Institutions Does Large-Scale Democracy
Require?” Political Science Quarterly 120, no. 2 (2005), 187–197.
3. The three most prominent works on transitions to democracy are: Guillermo
O’Donnell and Philippe C. Schmitter, Transitions from Authoritarian Rule:
Tentative Conclusions about Uncertain Democracies (Baltimore: Johns Hopkins
University Press), 1986; Samuel P. Huntington, The Third Wave:
Democratization in the Late Twentieth Century (Norman: University of
Oklahoma Press), 1991; and Adam Przeworski, Democracy and the Market:
Political and Economic Reforms in Eastern Europe and Latin America (NY:
Cambridge University Press), 1991.
4. Philippe C. Schmitter, “On Civil Society and the Consolidation of Democracy:
Ten General Propositions and Nine Speculations about their Relation in Asian
Societies.” Paper presented at an International Conference on Consolidating
the Third Wave Democracies: Trends and Challenges, Taipei, August 27–30,
1995, and Larry Diamond, “Rethinking Civil Society: Toward Democratic
Consolidation,” Journal of Democracy vol. 5, no. 3 (1994): 3–17.
5. Diamond, “Rethinking Civil Society,” 7–11.
6. For the debate on the relationship between civil society and the state, see the
following works: Peter Evens, Dietrick Rueschemeyer, and Theda Skocpol
(eds.) Bringing the State Back In (Cambridge, UK: Cambridge University
Press), 1985; Gabriel Almond. “The Return to the State,” American Political
Science Review 82 (1988): 853–874; and Timothy Mitchell. “The Limits of
the State: Beyond Statist Approaches and Their Critics,” American Political
Science Review 85, no. 1 (March 1991): 77–96.
7. Larry Diamond and Juan J. Linz, “Politics, Society, and Democracy in Latin
America,” in Larry Diamond, Juan J. Linz, and Seymour Martin Lipset (eds.),
Democracy in Developing Countries (Boulder, CO: Lynne Rienner), 1989, 1–59.
144 ● Notes

8. Adam Przeworski, Democracy and the Market: Political and Economic Reforms
in Eastern Europe and Latin America (Cambridge: Cambridge University
Press), 1991.
9. Samuel Huntington, Political Order in Changing Societies (New Haven, CT:
Yale University Press), 1968, 41.
10. John B. Londregan and Keith T. Poole, “Poverty, the Coup Trap and the
Seizure of Executive Power,” World Politics, 42, no. 1 (1990): 151–183.
11. Raymond Duch, “Economic Chaos and the Fragility of Democratic
Transitions in Former Communist Regimes,” Journal of Politics 57, no. 1
(1995): 126.
12. Karen Remmer, “The Political Impact of Economic Crisis in Latin America
in the 1980s,” American Political Science Review 85, no. 3 (1991): 777.
13. (Ibid., 794).
14. Mark J. Gasiorowski, “Economic Crisis and Political Change: An Event
History Analysis,” American Political Science Review 89, no. 4 (1995): 892.
15. Robert O. Keohane and Helen V. Milner (eds.), Internationalization and
Domestic Politics (NY: Cambridge University Press), 1996, 4.
16. The notable contribution of “second image reversed” thinking is that
international factors (institutions, agreements, laws, etc.) impact domestic
decision making, rather than second image explanations, which find that
domestic politics affects how a country behaves in the international arena.
17. These two works are leaders in the field in terms of initiating the discussion
about the relationship between international affairs and domestic politics.
Peter Gourevitch, “The Second Image Reversed: The International Sources
of Domestic Politics,” International Organization 32, no. 4 (1978):
881–912 and Peter J. Katzenstein, (ed.), Between Power and Plenty: Foreign
Economic Policies of Advanced Industrial Countries (Madison, WI: University
of Wisconsin Press), 1978.
18. Keohane and Milner, Internationalization, 16–17.
19. Henry S. Bienen and Mark Gersovitz, “Economic Stabilization, Conditionality,
and Political Stability,” International Organization 39, no. 4 (1985): 747.
20. Ibid., 735.
21. Samuel J. Valenzuela, “Democratic Consolidation in Post-Transitional
Setting: Notion, Process, and Facilitating Conditions,” in S. Mainwaring,
G. O’Donnell, and S. Valenzuela (eds.), Issues in Democratic Consolidation:
The New South American Democracies in Comparative Perspective (Notre
Dame: University of Notre Dame Press), 1992, 57–104.
22. Andreas Schedler, “Measuring Democratic Consolidation,” Studies in
Comparative International Development 36, no. 1 (2001): 66.
23. Ibid., 12 (pagination reflects Internet download of article).
24. In the case of Indonesia there are certainly regional separatist movements, in
Aceh and Papua, e.g., however, these forces are not challenging the govern-
ment at the national level.
25. Juan J. Linz and Alfred Stepan, Problems of Democratic Transition and
Consolidation (Baltimore: Johns Hopkins University Press), 1996, 6.
Notes ● 145

26. Ibid., 7–12.


27. Geoffrey Garrett and Peter Lange, “Internationalization, Institutions, and
Political Change,” International Organization 49, no. 4 (1995): 632.
28. John McBeth, “Family and Friends: Suharto Unveils an Inner-Circle
Cabinet,” Far Eastern Economic Review March 26, 1998, 20–22.
29. The choice of Bob Hasan for a cabinet position was highly controversial.
Hasan was a close friend of Suharto’s (and is ethnically Chinese) and had
significant business holdings in industries such as rattan and clove produc-
tion. In his new role Hasan was in a position to police and oversee the
industrial sectors in which he was a leader.
30. Wahid was very low profile himself in calling for Suharto’s ouster. However,
his support of students and his behind-the-scenes activities, helped encourage
more vocal actors to pressure Suharto.
31. There are many good accounts of the end of Suharto’s rule. See John
McBeth and Michael Vatikiotis, “The Endgame,” Far Eastern Economic
Review May 28, 1998, 12–15.
32. For a more detailed account of the violence against the Chinese, see Amy L.
Freedman, Political Participation and Ethnic Minorities Chinese Overseas in
Malaysia, Indonesia, and The United States (NY: Routledge), 2000, 90–96.
33. For good coverage of the surprising political events in Indonesia in both
May of 1998 and the fall of 1999, see various issues of Far Eastern Economic
Review (hereafter referred to as FEER). In particular, see Margot Cohen, “To
the Barricades,” FEER May 14, 1998, 21–24; Margot Cohen, John McBeth,
and Michael Vatikiotis, “Into the Void,” FEER June 4, 1998, 16–18; and
Margot Cohen and John McBeth, “Unlikely Victor,” FEER October 28,
1999, 12–13.
34. John McBeth, “Power Reversal,” FEER December 4, 1997, 79–80.
35. IMF Approves Stand-By Credit for Indonesia, Press Release Number 97/50.
International Monetary Fund, November 5, 1997.
36. Ibid.
37. Steven Susanto, “Indonesia and the IMF Pill,” FEER December 11, 1997, 32.
38. Michael Vatikiotis, “Man the Pumps: IMF Signals it May Make Stability the
Priority in Indonesia,” FEER June 11, 1998, 53.
39. For good reporting on this period, see Paul Watson, “Violence Flares in
Java,” The Toronto Star February 1, 1998, 1; and Seth Mydans, “Suharto is
Still Weighing a Drastic Economic Move,” The New York Times March 2,
1998, 9.
40. Margot Cohen, “To the Barricades,” FEER May 14, 1998, 21–24.
41. Ibid.
42. Michael Vatikiotis and Adam Schwarz, “A Nation Awakes,” FEER June 4,
1998, 14.
43. Ibid.
44. Ibid.
45. William Liddle, “Indonesia in 2000,” Asian Survey 41, no. 1 (2001):
208–231.
146 ● Notes

46. Ibid.
47. Michael Baker, “Tear Gas and Protests Waft Away as South Korean Students
go Quiet,” Christian Science Monitor August 20, 1989.
48. The logical explanation for the decrease in student activism in South Korea
by 1997 is simply that the goals of the student movement dating from
Syngman Rhee’s rule in the 1960s and continuing through the 1980s had
largely been met. Once seen as the champions of democracy and greater
social justice, after successful political transformation of the late 1980s and
early 1990s, there was a sense that the major goals of previous demonstrations
had been met. Without a moderate cause to draw many supporters, students
still active on campus in the mid and late 1990s tended to be more radical
and called for reunification with the North under the North’s framework.
See Sheryl WuDunn, “Student Passion in Korea: What’s the Point?” The
New York Times June 21, 1997, A1.
49. Sang-Hun Choe, “South Korean Students, Workers Protest IMF Deal,”
Associated Press December 13, 1997.
50. The Kia controversy came after a year of problems within some of South
Korea’s largest firms (chaebol). Hanbo was the first company in early 1997
to face significant problems; the government made no effort to save the
firm’s management, instead they contributed a flood of new money to the
company and effectively nationalized it. Later in the spring of 1997, when
other large conglomerates faced similar problem (Sammi in March and Jinro
in April), the government encouraged state and private banks to announce
“anti-bankruptcy” policies that would allow them to continue to lend money
to failing firms. The government contributed to the program by pumping
money (liquidity) into the banking system. Still it was not yet perceived as a
dire crisis. Stephen Haggard, The Political Economy of the Asian Financial Crisis
(Washington, D.C.: Institute for International Economic), 2000, 56–57.
51. Ibid., 4.
52. Choe, “South Korean Students.”
53. Uk Heo, “South Korea: Democratization, Financial Crisis, and the Decline
of the Developmental State,” in Shale Horowitz and Uk Heo (eds.), The
Political Economy of International Financial Crisis (NY: Rowman and
Littlefield), 2001, 151–164.
54. Ibid.
55. Ironically, the legislature did not approve Kim Jong Pil’s appointment as
prime minister.
56. Ha, Yong-Chool, “South Korea in 2000,” Asian Survey 41, no. 1 (2001).
57. Ibid.
58. Hong Yung Lee, “South Korea in 2002,” Asian Survey 43, no. 1 (2003):
64–77.
59. Ibid., 72.
60. Financial Times Information, “ROK Daily ‘Special Report’ Examines
Regionalism in South Korean Politics,” Financial Times Information
December 24, 2002.
Notes ● 147

61. S. Jayasankaran, “High Wire Act,” FEER October 9, 1997, 12.


62. For a summary of events in Malaysia, see Amy L. Freedman, Political
Participation 2000: 51–52.
63. Murray Hiebert and S. Jayasankaran, “After the Fall,” FEER 14, no. 38
September 17, 1998, 10–15.
64. S. Jayasankaran, “Malaysia: Surprise Attack,” FEER 162, no. 46 November 18,
1999, 18.
65. Patricia Martinez, “Malaysia in 2000,” Asian Survey 41, no. 1 (2001):
189–200.
66. Janet Matthews Information Services, “Malaysia: Review,” Janet Matthews
Information Services Quest Economic Database, World of Information Country
Report November 4, 2003, 2.

Chapter 1 Thailand: Successful or


Incomplete Democracy?
1. Phraya Manopakorn was selected prime minister but real power lay with the
three leaders already mentioned. Library of Congress Country Studies:
Thailand.
2. For a more detailed history of this period, see Pasuk Phongpaichit and Chris
Baker, Thailand Economy and Politics (Oxford: Oxford University Press),
1997, chapter 8, 266–268. Although Phibun was the center of power, Luang
Thamrongnaswasawat became prime minister. The late king’s younger
brother, nineteen-year-old Bhumibol Adulyadej (Rama IX), was chosen as
successor to the throne. The young king was in Switzerland at the time and
did not return to Thailand until 1951.
3. The elections were so irrelevant that Suchinda did not even bother to buy a seat.
4. Michael Kelly Conners, “Political Reform and the State in Thailand,”
Journal of Contemporary Asia 29, no. 2 (1999): 204.
5. Ji Giles Ungpakorn, “From Tragedy to Comedy: Political Reform in
Thailand,” Journal of Contemporary Asia 32, no. 2(2002): 194.
6. For simplicity sake, NGOs here refer to various types of associations, pro-
fessional, trade, labor, environmental, and social service groups.
7. Ukrist Pathmanand, “Globalization and Democratic Development in
Thailand: The New Path of the Military, Private Sector, and Civil Society,”
Contemporary Southeast Asia 23, no. 1 (2002): 24–42.
8. Phongpaichit and Baker, Thailand Economy, 272–273.
9. Ibid., 311–326.
10. Ungpakorn, “Tragedy to Comedy,” 191–204.
11. Ibid., 194.
12. Clark Neher, “Democratization in Thailand,” Asian Affairs, an American
Review 21, no. 4 (winter 1995): 202.
13. The king is powerful not just because of his title but because of the
veneration most Thais feel for the monarch. Ibid., 206.
148 ● Notes

14. The brief discussion of Thai history recounted here illustrates that fear of
communism and a close relationship with the United States provided both
support for military spending, bolstering the power and prestige of the armed
forces, and acted as a pretext for cracking down on leftist or progressive polit-
ical groups throughout the 1970s. See Phongpaichit and Baker, Thailand
Economy for more information.
15. Michael Vatikiotis, “Free at Last,” Far Eastern Economic Review (hereafter
referred to as FEER) July 10, 1997, 70–71.
16. Ibid., 71.
17. Rodney Tasker, “Hard Times Roll,” FEER August 7, 1997, 27.
18. Edward Tang, “Chavalit Scrambles to Soften Political Fallout from IMF
Aid,” The Straits Times (Singapore) July 31, 1997, 23.
19. Michael Vatikiotis, “Backyard Repairs,” FEER August 28, 1997, 17.
20. Seth Mydans, “As Turmoil Builds, Thai Leader Shuffles Cabinet,” New York
Times October 25, 1997, A3.
21. Amon had credibility, he had served as the secretary general of the Council
of State, a high-level legislative review organization and was seen as a moderate
voice for change.
22. For more on the DDC, look at Duncan McCargo, “Introduction:
Understanding Political Reform in Thailand,” in Duncan McCargo (ed.),
Reforming Thai Politics (Amsterdam, Netherlands: Nordic Institute of Asian
Studies), 2002, 3. McCargo sees Dr. Prawase Wasi as a force for compromise.
23. Michael Kelly Connors, “Political Reform and the State in Thailand,”
Journal of Contemporary Asia 29, no. 2 (1999): 201–226.
24. The vote in parliament was originally slated for mid August but was pushed
to September to allow the CDA to finish their debate and because of the
chaos of the economic crisis.
25. Tasker, “Hard Times Roll,” 27.
26. Michael Vatikiotis and Rodney Tasker, “Holding On,” FEER August 28,
1997, 14–16.
27. Michael Vatikiotis and Rodney Tasker, “Danger Ahead,” FEER September 11,
1997, 22.
28. Michael Vatikiotis, “People’s Putsch,” FEER September 18, 1997, 14–16.
29. Ibid.
30. Facts on File. “New Constitution Approved.” Facts on File World News
Digest. October 23, 1997, 777D2.
31. Michael Vatikiotis, “Democracy First,” FEER November 6, 1997, 20.
32. Pressure came from popular protests, mostly from middle-class business
interests in Bangkok, and there is a good possibility that military leaders also
urged him to leave. On the day of his resignation, military leaders paid him
a visit. According to military sources in Bangkok, Supreme Commander
General Mongkol Ampornpisit, using army adviser General Surayud
Chulanont as an emissary, persuaded Chavalit to step aside. Michael
Vatikiotis, “No Quick Fix,” FEER November 13, 1997, 15.
33. Michael Vatikiotis, “The Next Battle,” FEER November 20, 1997, 28.
Notes ● 149

34. Samuel Huntington, The Third Wave: Democratization in the Late Twentieth
Century (Norman: University of Oklahoma Press), 1991, and the shorter
version of this work: “How Countries Democratize,” Political Science
Quarterly 106, no. 4 (winter 1991): 579–616; Adam Przeworski, Democracy
and the Market: Political and Economic Reforms in Eastern Europe and Latin
America (NY: Cambridge University Press), 1991; Guillermo O’Donnell
and Philippe C. Schmitter, “Tentative Conclusions about uncertain
Democracies,” in Guillermo O’Donnell, Philippe C. Schmitter, and
L. Whitehead (eds.), Transitions from Authoritarian Rule (Baltimore: Johns
Hopkins University Press), 1986; Donald Share and Scott Mainwaring,
“Transitions through Transaction: Democratization in Brazil and Spain,” in
Wayne A. Selcher (ed.), Political Liberalization in Brazil: Dynamics,
Dilemmas, and Future Prospects (Boulder, CO: Westview Press, 1986),
177–179.
35. Each scholar uses slightly different terminology to describe essentially the
same processes. Instead of detailing the differences among transition theo-
rists, I have chosen to use Huntington’s terminology and roughly his outline
for how transitions occur.
36. Huntington’s criterion of democratization is when a government is chosen
through an open, competitive, fully participatory, and fairly administered
election. Huntington, “How Countries Democratize,” 582.
37. Stephen Haggard and Robert R. Kaufman, “The Political Economy of
Democratic Transition,” in Lisa Anderson (ed.), Transitions to Democracy
(NY: Columbia University Press), 1999, 77.
38. Michael Vatikiotis, “Indirect Intervention,” FEER September 4, 1997, 14.
39. Ibid.
40. Edward Tang, “Chavalit Scrambles to Soften Political Fallout from IMF
Aid,” The Straits Times (Singapore) July 31, 1997, 23.
41. Vatikiotis, “No Quick Fix,” 15.
42. Tang, “Chavalit Scrambles,” 23.
43. Ibid.
44. Vatikiotis, “People’s Putsch,” 16.
45. Amy L. Freedman, “Economic Crises and Political Change: Indonesia, South
Korea, and Malaysia,” World Affairs 166, no. 4 (spring 2004): 185–196.
46. Karen Remmer, “The Political Impact of Economic Crisis in Latin America
in the 1980s,” American Political Science Review 85, no. 3 (1991): 777.
47. Note: this direct quote was written in the past tense but I feel it should be
in present tense because the detailed changes are still in effect.
48. McCargo. “Introduction,” 10.
49. Ibid.
50. Ibid.
51. For more on these oversight institutions see ibid. Also see Robert B.
Albritton and Thawilwadee Bureekul, “Developing Democracy Under A
New Constitution in Thailand.” Paper presented at the American Political
Science Association national meeting, Philadelphia, PA, September 2003, 2.
150 ● Notes

52. Pathmanand. “Globalization and Democratic Development,” 27–28.


53. Ibid., 27.
54. Ibid., 27–28.
55. Yuan Li, “Why Controversial Tycoon Wins Election in Thailand,” Xinhua
News Agency January 7, 2001. In a close decision, the court cleared him of
these charges.
56. Ibid.
57. “Thais Love Thaksin,” The Economist April 19, 2003, U.S. edition.
58. Amy Louise Kazmin, “Thailand Faces Long Wait for Final Poll Results,”
Financial Times (London) January 12, 2001, 8.
59. “Thailand to Hold Second Round of Voting of General Election,” Xinhua
News Agency January 19, 2001.
60. “Thais love Thaksin.”
61. Economist Intelligence Unit (EIU), “Country Briefings: Thailand Economic
Statistics,” Economist.com.
62. Ibid.
63. Ibid.
64. “Ouster of Editor Intensifies Press Freedom Fears in Thailand,” The China
Post, Internet Edition February 29, 2004.
65. Ibid.
66. Ibid. Also, a seminar was held in March of 2004 where participants from
several activist groups (such as the Confederation of Consumer
Organizations, the Campaign for Popular Media Reform and the Campaign
for Popular Democracy) discussed political problems such as curbs on media
freedoms, the government’s poor handling of the avian flu outbreak, and a
general feeling that the “Thaksin regime has destroyed the atmosphere of
democracy.” Ampa Santimatanedol, “Thailand: Thaksin Regime
‘Undemocratic,’ ” Bangkok Post March 4, 2004.
67. “Thais Love Thaksin.”
68. Jacques Chai Chomthngdi, “Thaksin’s Retreat: Chance for Change or
Consolidation of Power?” April 7, 2006. Focus on the Global South.
http://www.isn.ethz.ch/news/sw/details.cfm?id16040. Accession
date: June 25, 2006.
69. Thaksin’s popularity has wavered at times. In September of 2004, well before
the elections, his pubic approval rating slipped below 50% to 48.1%. This was
down from 61.6% in the summer of 2004. According to respondents of the
survey, the dip in his popularity came from criticism over the state of the econ-
omy, corruption, and violence in the south. “Thai Prime Minister’s Popularity
Slip: Survey,” Xinhua News Agency, Xinhua General News Service September 23,
2004. In winter of 2005 Thaksin won the election in a landslide, and his
approval rating was close to 80%! However, by July 2005 his popularity
slumped to 46%. Robert Horn, “Thaksin’s Troubles,” Time Asia July 18, 2005.
70. “Thailand Insurgency Leader Admits Separation Motive for Latest
Violence,” Xinhua News Agency, Xinhua Gerneal News Service April 30,
2004.
Notes ● 151

71. The Associate Press identified some of the dead, many of whom were
teenagers, as local villagers, including eighteen members of a soccer team.
Seth Mydans, “Thai Troops Flood Islamic Trouble Zone,” New York Times
April 30, 2004, 3.
72. Ibid.
73. Chomthonsdi, op. cit.
74. For work on civil society organizations in Thailand today, see LeeRay M.
Costa, “Activist Intellectuals: Scholar–NGO Interfaces in Thailand’s Civil
Society,” Asian Social Issues Program September 28, 2005; Antonio
Contreras, “State–Civil Society Relations and Forest Governance in
Thailand the Philippines.” Unpublished article from the web, 2000;
“Democratic Planning in Thailand: Khon Kaen Civic Assembly” shows a
model of local government/NGO cooperation and planning for develop-
ment programs.
75. Pathmanand, “Globalization and Democratic Development,” 4.
76. Amy Louise Kazmin, “Thailand Wooed by Prospect of Trade Pact with
U.S.,” Financial Times (London) November 19, 2003, 2.
77. Ibid.
78. Thaksin has been accused of covering up the mounting bird flu crisis in an
attempt to protect the US$1.2 billion poultry exporting industry. Sarah
Stewart, “Thai PM’s Fortunes take a Tumble with Back to Back Crises,”
Agence France Presse March 7, 2004.
79. Nattaya Chetchotiros, “Rivals Battle to End Thaksin Era,” Bangkok Post
February 9, 2005.
80. Robert Albritton and Thawilwadee Bureekul, “The Meaning of Democracy
in a Developing Nation,” MPSA: Midwest Political Science Association
Conference, April 3–6, 2003.

Chapter 2 South Korea: The Final


Hurdle for Democracy
1. Charles S. Lee, “Not a Pretty Picture,” Far Eastern Economic Review
September 25, 1997, 78–83. (The Far Eastern Economic Review is hereafter
known as FEER.)
2. Mark Manyin, “South Korean Politics and Rising ‘Anti-Americanism’:
Implications for U.S. Policy Toward North Korea’ ” CRS Web, Report for
Congress, May 6, 2003.
3. In 2006 there are five main Korean political parties: President Roh’s party,
the URI, the GNP, The Democratic Labor Party, the Democratic Party, and
the United Liberal Democrats. There are several smaller parties that I will
not discuss here. Most of these parties have undergone numerous name and
membership changes. I will attempt to highlight the major changes here.
The GNP was formed in 1963 as the Democratic Republican Party, it then
changed to the Democratic Justice Party, in 1991 it merged with two other
152 ● Notes

parties to form the Democratic Liberal Party and in 1994 was renamed the
New Korea Party. It became the GNP in 1996. The Uri Party was the New
Party for Participatory Citizens until October 22, 2003, when members of
the Millennium Democratic Party broke off to form Uri. The Democratic
Party has also seen many name changes. It started as the New Democratic
Party, and then became the New Korea Democratic Party, the Reunification
Democratic Party, the Party for Peace and Democracy, the Millennium
Democratic Party, and finally the Democratic Party. The United
Liberal Democratic Party was formed in 1995 and the name has remained
the same. The Democratic Labor Party was established in January 2000
as the party for the Korean Confederation of Trade Unions. The name has
remained the same. For more information and background, see U.S.
Department of State, South Korea Briefing, Library of Congress Country
Studies on South Korean political parties.
4. Doh C. Shin, Mass Politics and Culture in Democratizing Korea (NY:
Cambridge University Press), 1999, 179–180.
5. Meredith Woo-Cumings, “The State, Democracy and the Reform of the
Corporate Sector in Korea,” in T.J. Pempel (ed.), The Politics of the Asian
Economic Crisis (Ithaca, NY: Cornell University Press), 1999, 117–121.
6. In 1979 Kim Dae Jung was expelled from the National Assembly for “insult-
ing the president” (President Park). This sparked demonstrations in Pusan,
his base of political support. The government sent in troops to restore order.
The turmoil led to repression by military, and this ultimately led to
President Park’s assassination by a Korean CIA agent on October 26, 1979.
Kim was arrested by military leaders who took over (martial law had been
declared in Seoul after Park’s death). In May 1980, martial law was extended
throughout the country and resistance erupted all over the country. The
most determined demonstrations occurred in Kwangju; it took troops
ten days to put down the protests. On May 17, 1980, Kwangju demonstrations
against General Chun resulted in a massacre.
7. The DJP was the party associated with military rule under Chun and Park.
8. Shin, Mass Politics, 3. See also, Seung-Mock Yang, “Political Democratization
and the News Media,” in Larry Diamond and Doh C. Shin (eds.),
Institutional Reform and Democratic Consolidation in Korea (Stanford, CA:
Hoover Institution Press), 1999, 154.
9. Shin, Mass Politics, 4–5.
10. Two years after their convictions, they were pardoned and set free. Ibid., 7.
11. Woo-Cumings, “The State, Democracy,” 123.
12. Ibid., 124. See also I. Lieberman and William Mako, Korea’s Corporate Crisis
(Washington, D.C.: World Bank), 1998.
13. Ibid., 124.
14. Lee, “Pretty Picture,” 82.
15. Shim Jae Hoon, “Bridesmaid No More,” FEER September 18, 1997, 20.
16. Charles S. Lee, “The Next Domino?” FEER November 20, 1997, 14–16.
17. Charles S. Lee, “Out of Our Hands,” FEER December 4, 1997, 81.
Notes ● 153

18. Ibid., 82.


19. Sang-Hun Choe, “South Korean Students, Workers Protest IMF Deal,”
Associated Press December 13, 1997.
20. Granitsas, Alkman “The Right Stuff,” FEER December 18, 1997, 65.
21. Mary Jordan, “Opposition Leader Winds South Korean Vote,” Washington
Post December 19, 1997, A1.
22. Sunhyuk Kim, “Civic Mobilization for Democratic Reform,” in
L. Diamond and D.H. Shin (eds.), Institutional Reform and Democratic
Consolidation in Korea (Stanford, CA: Hoover Institution Press, Stanford
University), 2000, 293.
23. Ibid., 279–281.
24. Some credit President Regan with helping to convince the Korean Central
Intelligence Agency (KCIA) not to kill Kim Dae Jung in 1982; instead, the
KCIA allowed Kim to go into exile for several years in the United States.
25. Steven Fish, “Rethinking Civil Society: Russia’s Fourth Transition,” Journal
of Democracy 5 (1994): 34.
26. Kim, “Civic Mobilization,” 282–283.
27. Ibid., 295.
28. Young Kwan Yoon, “South Korea in 1999: Overcoming Cold War Legacies,”
Asian Survey 40, no. 1 (January/February 2000): 167.
29. Ibid., 167–168.
30. It is not at all clear that this has transpired.
31. In addition to making a deal with Kim Jong Pil to make him prime minister
under this new political arrangement, Kim Dae Jung promised to allocate
half of the cabinet posts to members of Kim’s ULD party. Ibid., 170.
32. By the time Kim left office, two of his sons had been charged with influence
peddling and corruption. Kim was forced to apologize repeatedly to South
Koreans for both his sons’ and his close associates’ misdoings.
33. Yong-Chool Ha, “South Korea in 2000: A Summit and the Search for New
Institutional Identity,” Asian Survey 41, no. 1 (January/February 2001):
32–33.
34. Park Jie Won, a close ally of President Kim, resigned in September 2000
over allegations of influence peddling in an illegal loan from Hanvit Bank.
Park may have helped secure a multibillion won loan for one of his former
aids. People’s Daily, September 9, 2000, www.peoplesdaily.com.
35. Yong-Chool Ha, “South Korea in 2001: Frustration and Continuing
Uncertainty,” Asian Survey, 42, no. 1 (January/February 2002): 60.
36. Ibid., 58 and 61.
37. Ibid., 59.
38. Ibid., 61
39. Hong Yung Lee, “South Korea in 2002: Multiple Political Dramas,” Asian
Survey 43, no. 1 (January/February 2003): 65–66. Another interesting
aspect of the 2002 election was the use of the internet for political organi-
zation, disseminating information, and for rallying support. Ibid., 66.
154 ● Notes

40. Kim Young Sam is held in contempt by many Koreans because of his links
to the military regimes of the past, and more importantly because he has
been blamed for the financial crisis.
41. Ibid., 71.
42. This is a strange example of public opinion taking the place of actual voting.
Party members, remember, had already chosen Roh to run for president.
Ibid., 72.
43. Ibid.
44. Because Roh was elected with overwhelming support from labor and pro-
gressive groups, there were enormous expectations from these groups for
increased power. Thus, there were more strikes and unrest when expecta-
tions were not met. See Hong Yung Lee, “South Korea in 2003: A Question
of Leadership,” Asian Survey 44, no. 1 (January/February 2004): 130–143.
45. Byun Kuk-kun, “Election Law Violation to Dominate Impeachment
Review,” Korea Times March 15, 2004.
46. Victor Cha, “South Korea in 2004: Peninsular Flux,” Asian Survey 45, no. 1
(January/February 2005): 33–40.
47. Balbina Y. Hwang, “By-Elections in South Korea: Democracy Marches On,”
May 5, 2005, Webmemo #737, Heritage Foundation.
48. Nicholas Kristoff, “At Crossroads of Democracy, South Korea Hesitates,”
New York Times July 10, 1996, A3. Kristoff is quoted in Doh Chull Shin,
“The Evolution of Popular Support for Democracy during Kim Young Sam’s
Government,” in Diamond and Shin (eds.), Institutional Reform and
Democratic Consolidation in Korea (Stanford, CA: Hoover Institution Press,
Stanford University), 2000, 233.
49. Shin, Mass Politics, 75. (It should be noted that this data is based on surveys
conducted in South Korea from 1993 to 1997. One might imagine that
given the continued scandals and prevalence of money politics throughout
the 2002 election, Roh’s victory signals a further yearning for democracy
among the people.)
50. Shin, “The Evolution,” 254.
51. Ibid., 239.
52. For one such example, see the chapter on South Korea in Ezra Vogel, Four
Little Dragons: The Spread of Industrialization in East Asia (Cambridge, MA:
Harvard University Press), 1991.
53. The North Korean regime says that the weapons are to protect itself from
U.S. attack. The Bush administration worries that these weapons could be
used to blackmail the United States, attack the South, or sell for foreign
currency.
54. For good surveys of U.S.–South Korean relations in dealing with the North,
see the already noted articles from Asian Survey in the first issue of every year
from 2001 to 2005.
55. Eun Mee Kim, “Reforming the Chaebols,” in Diamond and Shin (eds.),
Institutional Reform and Democratic Consolidation in Korea (Stanford, CA:
Hoover Institution Press, Stanford University), 2000, 171–198.
Notes ● 155

56. For a list and full description of these policy objectives, as well as other
attempted reforms, see Ibid., 172–181.
57. Ibid., 185.
58. Berlin-based Transparency International, for instance, gave South Korea a
score of 4.5 on its 2002 corruption perception index, with “0” indicating
“highly corrupt” and “10” representing “highly clean.” The United States
scored a 7.7. The index aggregates surveys of “well-informed people” with
regard to the extent of corruption, defined as the misuse of public power for
private benefit, and indicated by the frequency of corrupt payments, the
value of bribes paid, and the resulting obstacle imposed on businesses.
Additionally, South Korean companies scored a 3.9—eighteenth lowest of
the world’s twenty-one largest exporters on Transparency International’s
bribe payers index, which measures perceptions of the likelihood that com-
panies will pay bribes when they do business abroad. “0” indicates “high
bribery” and “10” indicates “low bribery.” U.S. companies scored a 5.3.
Transparency International, Global Corruption Report 2003, 262–267,
http://www.globalcorruptionreport.org.

Chapter 3 Indonesia: Democratization


but Hurdles Still Remain
1. Some scholars believe that Suharto chose this phrase to make the coup
sound more creepy. Gestapu sounds terribly similar to Gestapo.
2. For current research on the 1965 coup, see Steven Drakeley, Lubang Buaya:
Myth, Misogyny and Massacre (Clayton, Victoria: Center of Southeast Asian
Studies, Monash University, Australia), 2000, and for the more official ver-
sion of events, see State Secretariat of the Republic of Indonesia, The
September 30th Movement (Jakarta: State Secretariat of the Republic of
Indonesia), 1995.
3. For more information on political economy issues under Suharto, see Charles
Coppel, “Patterns of Chinese Political Activity in Indonesia,” in J.A.C. Mackie
(ed.), The Chinese in Indonesia (Australia: Australian Institute of International
Affairs), 1976, 19–76; Harold Crouch, The Army and Politics in Indonesia
(Ithaca, NY: Cornell University Press), 1988; and Mochtar Buchori, Before
and After Refomasi (Jakarta: Jakarta Post Press, Asia Foundation), 2001.
4. To read more about the details of Indonesia’s experience during the eco-
nomic crisis, see the series of articles from the Far Eastern Economic Review
(henceforth FEER), reprinted in Faith Keenan (ed.), The Aftershock: How
and Economic Earthquake is Rattling Southeast Asian Politics (Hong Kong:
FEER), 1998. See chapter 2 for articles on Indonesia during the end of 1997
and early 1998, pages 22–63.
5. For a more detailed account of the violence against the Chinese, see Amy L.
Freedman, Political Participation and Ethnic Minorities: Chinese Overseas in
Malaysia, Indonesia, and the United States (NY: Routledge Press), 2000. See
also Margot Cohen, “Turning Point,” FEER July 30, 1998.
156 ● Notes

6. General Election Commission of Indonesia. Analyzing Indonesia’s Election,


1999. (Jakarta: Indonesian General Election Commission) 2001. See
chapters 3 and 4 on the 1999 elections in Dwight King, Half-Hearted
Reform: Electoral Institutions and the Struggle for Democracy in Indonesia
(Westport, CT: Praeger), 2003.
7. The official reasons given for Gus Dur’s impeachment were because of his
inability to address continuing corruption at the highest levels, economic
disorder, and separatist movements. However, to some extent these were just
convenient excuses. He was impeached mostly because he ignored the
people and parties that brought him to power. He rarely consulted with others
before making decisions and alienated those who initially supported him.
8. Greg Barton, Gus Dur: The Authorized Biography of Abdurrahman Wahid
(Jakarta: Equinox Publications), 2002.
9. Lex Rieffel, “Indonesia’s Quiet Revolution,” Foreign Affairs, 83, no. 5
(September/October 2004): 98–111.
10. Ibid., 101.
11. Ibid., 102.
12. Karim Raslan, “Can Yudhoyono Use His Big Win to Change Indonesia?”
The Straits Times October 7, 2004.
13. Rieffel, “Quiet Revolution,” 2 (pagination reflects electronic download of
article). The presidential/vice presidential pairings seemed to represent both
nationalist sentiments and a moderate Islamic image. With Kalla as his vice
president, it is hard to see SBY’s ticket as totally secular.
14. Ibid.
15. Derwin Pereira, “Bambang Declared Clear Winner,” The Straits Times
October 5, 2004.
16. “Yudhoyono Still Ahead in Indonesia Vote Tally, Parties Seek Allies,” Agence
France Presse July 9, 2004.
17. Hank Valentino and Rakesh Sharma, Indonesia Nationwide Public Opinion
Survey, 2003 (Washington, D.C.: International Foundation for Election
System, IFES), 1–17, 25–27.
18. Amnesty International, “Indonesia: Prisoners of Conscience Action 2004
Case Sheet: The Tempo Trials,” on Amnesty International’s website,
http://web.amnesty.org.
19. An example of this was the deportation of Sidney Jones from the International
Crisis Group both in the summer of 2004 and again more briefly in fall 2005
for her bluntness about the nature of Islamic terrorism in Indonesia.
20. Human Rights Watch, “Indonesia: End Pre-Election Crackdown on Critics”
New York, June 2, 2004.
21. Damien Kingsbury, “The Reform of the Indonesian Armed Forces,”
Contemporary Southeast Asia 22, no. 2 (August 2000): 309.
22. Ibid., 306.
23. Leo Suryadinata, “Indonesia: Continuing Challenges and Fragile Stability,”
Southeast Asian Affairs 2004: 96–97. For more on TNI, see Angel Rabasa,
The Military and Democracy in Indonesia (Santa Monica, CA: Rand), 2002.
Notes ● 157

24. Kingsbury, “Armed Forces,” 317.


25. For information on these paramilitary groups, see Donald J. Porter, “Citizen
Participation Through Mobilization and the Rise of Political Islam in
Indonesia,” The Pacific Review 15, no. 2 (2002): 201–224 and Suryadinata,
“Indonesia,” 91.
26. Suryadinata, “Indonesia,” 93. Also see Evelyn Rusli, “Indonesia and
Separatists Reach Deal to End 30 Years of Fighting,” New York Times
July 18, 2005, A3.
27. Ibid., 27.
28. Donald Weatherbee, “Indonesia: Political Drift and State Decay,” Brown
Journal of World Affairs IX, no. 1 (spring 2002): 27.
29. Ibid.
30. Zachary Abuza, Militant Islam in Southeast Asia (Boulder, CO: Lynne
Rienner), 2003, 69–73.
31. Weatherbee, “Political Drift,” 23–33.
32. For the best information on Islamic groups in Indonesia, see Sidney Jones’
report for the International Crisis Group (ICG) and Abuza, Militant Islam.
33. In the case of the October 2005 Bali bomb blasts, there have been no arrests
or convictions at the time of writing, and there is speculation that the
bombers were fringe members of JI.
34. At the signing of the IMF agreement with Michel Camdessues in January 1998,
Suharto looked like a defeated general who had lost the war.
35. These institutions meet Dahl’s requirements for a country to be “democratic.”
Robert A. Dahl, “What Political Institutions Does Large-Scale Democracy
Require?” Political Science Quarterly 120, no. 2 (2005): 187–197.
36. Weatherbee, “Political Drift.”
37. Stephen Haggard and Robert R. Kaufman, “The Political Economy of
Democratic Transitions,” in Lisa Anderson (ed.), Transitions to Democracy
(NY: Columbia University Press), 1999, 76.
38. Ibid., 77.
39. Samuel J. Valenzuela, “Democratic Consolidation in Post-Transitional
Setting: Notion, Process, and Facilitating Conditions,” in Mainwaring,
O’Donnell, and Valenzuela (eds.), Issues in Democratic Consolidation: The
New South American Democracies in Comparative Perspective (Notre Dame:
University of Notre Dame Press), 1992, 57–104.
40. Andreas Schedler, “Measuring Democratic Consolidation,” Studies in
Comparative International Development 36, no. 1 (2001): 66.
41. Ibid., 12 (pagination reflects Internet download of article).
42. Additionally, the IMF has suffered a loss of authority to tell countries how
to revamp their economies. In the wake of the 1997 economic crisis, the
IMF was repeatedly criticized for making the problems worse, not better.
43. Matthew Moore, “Indonesia Battles to Attract Foreign Investors,” Sydney
Morning Herald January 15, 2005.
44. For theoretical work on the relationship between investment and democ-
racy, see Sylvia Maxfield, “Capital Mobility and Democratic Stability,”
158 ● Notes

Journal of Democracy 11, no. 4 (October 2000): 95–107, and Mary Ann
Hadley, PhD dissertation for the NYU Politics Department.
45. Data from public opinion polls show that Indonesians’ top concerns are lack
of jobs and the prices of goods, followed by worry over the economy more
generally. The next concern is corruption. For the period before the elec-
tion, see the report by Valentino and Sharma, Indonesia Nationwide.
46. One of the best studies of how justice works at the local level is the World
Bank’s report Village Justice in Indonesia, February 2004. The report finds
that most villagers prefer to use informal means of dispute resolution than
going through the police and the courts. The reasons given for this are a lack
of control over the process once these channels are used, as well as fear of
retribution from officials or those higher in the social order. While the
World Bank report found that most of the time the police and the courts
worked as they were supposed to, the decisions were often not executed,
leading to further skepticism about the process and about legal institutions
in general.
47. “Indonesia Arrests Election Chief,” BBC News May 21, 2005.
48. See Jusuf Wanandi, “Islam in Indonesia: Its History, Development and
Future,” Asia Pacific Review 9, no. 2 (November 2002): 104–112.
49. For work on Islamic civic organizations and political parties, see Endy M.
Bayuni. “Terrorism Undermines Political Islam in Indonesia,” Yale Center
for the Study of Globalization, Yale Global Online, 2003. It should also be
noted that there is some concern and debate about just how “moderate” PKS
is. Sadanand Dhume views PKS as a bigger threat to Indonesian democracy
than the JI. See Sadanand Dhume, “Indonesian Democracy’s Enemy
Within,” FEER, May 2005: 38–42.
50. For work on moderate Islamic organizations, see Robert Hefner, Civil Islam
Muslims and Democratization in Indonesia (Princeton, NJ: Princeton
University Press), 2000, and more historically, C. van Dijk, Rebellion under
the Banner of Islam: The Darul Islam in Indonesia (The Hague: Martinus
Nijhoff ), 1981. For more on militant organizations see Abuza, Militant Islam.
51. The Justice Party was the first incarnation of PKS. In the 1999 elections it
did not reach the 2% threshold of votes to allow it to run in the next elec-
tions and so they formed a “new” party, PKS.
52. Muhammad Fuad, “Limits to Islamic Radicalism in Indonesia,” http://
www.india-seminar.com/2003/527/527%20muhammad% 20fuad.htm.
53. Abuza, Militant Islam, 24, and BBC News, “Indonesia’s Muslim Militants,”
August 8, 2003.
54. van Dijk, Rebellion, and, International Crisis Group, “Recycling Militants
in Indonesia: Darul Islam and the Australian Embassy Bombing,” Asia
Report no. 92 (February 22, 2005).
55. Abuza, Militant Islam, 141.
56. Two examples of this occurred in the summer of 2005. A small Islamic sect
Ahmadiyah was violently attacked in July. People were beaten and their
offices and Mosque were vandalized and torched by thugs claiming that
Notes ● 159

Ahmadiyah was an offense to Islam. The police stood by and did nothing.
Later in the summer, the leaders of the highest religious council, the
Council of Ulema (MUI), who were appointed by the Ministry of Religion,
issued a series of fatwas. Eleven fatwas were issued against religious plural-
ism and were aimed at promoting a more rigid version of Islam. The fatwas
reassert the supremacy of the Koran over other religions legally authorized
in Indonesia, such as Catholicism, Protestantism, Hinduism, and
Buddhism; make various moderate Islamic organizations, such as the Liberal
Islamic Network, “illegal”; and ban interfaith prayers unless a Muslim is
leading the service, interfaith marriages, and women leading prayers when
men are in attendance. Fatwas are not legal or binding. MUI members are
appointed by the government but their edicts do not have the power of law
and can be ignored or obeyed as people see fit. The government (SBY and
the Ministry of Religion) made little or no comment or response to the fat-
was. Like its (non)response to the attacks on Ahmadiyah earlier in the sum-
mer, the government seems to think that it can ignore these religious
tinderboxes and they will blow over. The second reason the fatwas are sig-
nificant is because they have illustrated the divide between moderate and
more hard-line voices within Islam. This divide is evident in MUI and
within Muhammadiyah and NU. Which side will come to dominate the
debate and place of Islam in Indonesia is incredibly important for democ-
racy. While most ordinary people will take little notice of the fatwas, it may
have a more chilling effect as a message to militant Islamic groups: that a
more intolerant version of Islam is acceptable and actually promoted by offi-
cial, mainstream forces, thus legitimizing the views of militant groups.
57. Many people argue that Indonesia (since the Bali and Jakarta bombings) has
been more forceful at arresting militants; over 250 people have been arrested
in connection with terrorist actions. However, the government would like to
carry out these actions in such as way that they are not seen as targeting
good Muslims or acting because of pressure from the United States. For arti-
cles on U.S. pressure on Indonesia see CNN, “Indonesia Feels Pressure to
Act on Terrorism,” January 18, 2002, and John Roberts, “The U.S. Exploits
‘Terrorist Threats’ to Step Up Pressure on Indonesia,” World Socialist
Website, October 2, 2002.
58. High voter turnout in Indonesia is relative. During Suharto’s rule, more
than 90% of voters showed up for elections. However, it is hard to see this
number as a true indication of people wanting to express their political
preferences. Turnout in the 2004 elections started out at around 80% in the
spring and fell to around 70% by the September 2004 run off.

Chapter 4 Malaysia: Defiance in the


Face of Adversity
1. Chalongphob Sussangkarn, Frank Flatters, and Sauwalak Kittipranpas,
“Comparative Social Impacts of the Asian Economic Crisis in Thailand,
160 ● Notes

Indonesia, Malaysia and the Philippines: A Preliminary Report,” Thailand


Development Research Institute Quarterly Review 14, no. 1 (March 1999): 3–9.
2. Olin Liu, “Overview,” Malaysia: From Crisis to Recovery (Washington, D.C.:
IMF Publication), 2003, 1–3.
3. Ranjjit Gill, Anwar Ibrahim Mahathir’s Dilemma (Singapore: Epic
Management Services Pte. Ltd.), 1998, 19.
4. S. Jayasankaran, “High Wire Act,” Far Eastern Economic Review October 9,
1997, 14.
5. Ibid., 21.
6. Ibid., 23.
7. For a summary of events in Malaysia, see Amy L. Freedman, Political
Participation and Ethnic Minorities (NY: Routledge), 2000, 51–52.
8. John Funston, “Malaysia’s Tenth Elections: Status Quo, Reformasi or
Islamization?” Contemporary Southeast Asia: A Journal of International &
Strategic Affairs, 22, no.1 (April 2000): 2 (page numbers reflects html text).
9. Ibid., 3.
10. Gill, Mahathir’s Dilemma, 29.
11. Ibid., 45.
12. Ibid., 49.
13. Fan Yew Teng, Anwar Saga Malaysia on Trial (Selangor, Malaysia: Genting
Raya Sdn. BHD), 1999, 114–115.
14. Ibid., 112.
15. Funston, “Tenth Elections,” 5.
16. Ibid., 5.
17. In part this was a function of government pump priming, but it helped
UMNO’s electoral chances.
18. BA parties included PAS, Keadilan, DAP, and PRM.
19. Ibid., 8.
20. Patricia Martinez, “Malaysia in 2000.” Asian Survey 41, no. 1 (January
2001): 189–200, 189.
21. Hussin Mutalib, “Malaysia’s 1999 General Election: Signposts to Future
Politics,” Asian Journal of Political Science 8, no. 1 (June 2000) 69–70.
22. Ibid., 70.
23. While property rights have mostly been respected in Malaysia, Chinese
business owners have sometimes been forced to take on Malay partners and
have been told that they must hire certain numbers of Malay employees.
24. For a more detailed account of Malaysian politics, see Harold Crouch,
Government and Society in Malaysia (Ithaca, NY: Cornell University Press),
1996; and Gordon Means, Malaysian Politics: The Second Generation
(Singapore: Oxford University Press), 1991.
25. Quote from “Malaysia Online: A Look at the Impact of Online
Journalism in Malaysia,” http://journalism.uts.edu.au/subjects/oj1/
oj1_ a2002/internetactivisminasia/ mediahistory.htm. Also see M. Anuar,
“Media and Democracy in Malaysia,” From Media and Democracy in Asia
Notes ● 161

put out by Asian Media Information and Communication Ctr. (AMIC


Singapore), 2000, 115–126.
26. In contrast, someone who was born in, let us say; Iraq and moved to
Malaysia as a teenager could easily become a citizen and he or she would
then be seen as ethnic Malay.
27. The government explanation for the 1969 riots was that it was sparked by
ethnic economic inequality and this became the justification for NEP.
However, the riots were clearly triggered by the results of the 1969 election
when the opposition parties did better than expected and some Chinese
celebrated the victory in the streets and made comments about finally
getting a chance to control political and economic life in Malaysia.
28. It is, of course, not terribly clear if the NEP is to get the credit for the grow-
ing numbers of middle class Malays in the 1980s, or if economic gains
would have accrued to them anyway. There is some good evidence that the
NEP benefited mostly those Malays who were already wealthy and well-
connected. For more information on ethnic politics and the NEP, see Jomo,
Sundaram, “The New Economic Policy and Interethnic Relations in
Malaysia,” UNRISD, Geneva, September 1, 2004; Freedman, Political
Participation, chapter 2; Sieh Lee Mei Ling, “The Transformation of
Malaysian Business Groups,” in Ruth McVey (ed.), Southeast Asian
Capitalists (Ithaca, NY: Studies on Southeast Asia Program), 1992,
103–126; and Edmund Terence Gomez, Money Politics in the Barisan
National (KL, Malaysia: Forum Books), 1991; and Corporate Involvement of
Malaysian Political Parties (Australia: Center for Southeast Asian Studies),
1994.
29. Crouch, Government and Society, 71.
30. Martinez, “Malaysia in 2000,” 190.
31. Ibid., 195.
32. Patricia Martinez, “Malaysia in 2001,” Asian Survey 42, no. 1 (January
2002): 133–140, 134–135.
33. Ibid., 135.
34. Ibid., 135.
35. Bridget Welsh, “Malaysia in 2004—out of Mahathir’s Shadow?” Asian
Survey 45, no. 1 (January/February 2005): 154.
36. EIU Views Wire, “Malaysia Politics: Badawi Struggles to Control UMNO,”
Economist Intelligence Unit, December 22, 2004, 1–2.
37. EIU Views Wire, “Malaysian Politics: Anwar Becomes More Politically
Active,” Economic Intelligence Unit, December 22, 2004, 1.
38. Amnesty International web site, information on human rights in Malaysia,
http://www.web.amnesty.org/report2005.
39. Welsh, “Malaysia in 2004,” 156.
40. Farish A. Noor, “Blood Sweat and Jihad: The Radicalization of the Political
Discourse of the Pan-Malaysian Islamic Party (PAS) from 1982 Onwards,”
Contemporary Southeast Asia 25, no. 2 (August 2003): 202.
162 ● Notes

41. Funston, “Tenth Elections,” 9.


42. Chetan Kulkarni, “Experts: SE Asia’s Islam Peaceful,” United Press
International, June 6, 2005.
43. While Anwar and UMNO have said that he will not rejoin the party, there
is historical precedent for this. Mahathir himself was expelled from the party
during his political career and came back with a roar to remake both the
party and Malaysian politics. Also, in 1989 Tunku Razaleigh challenged
Mahathir and the legality of BN and so broke away and formed Semangat
’46, a short-lived opposition party. By 1996 Semangat ’46 members, includ-
ing Razaleigh, were back in the UMNO fold. Freedman, Political
Participation, 69–70. An interesting aside to this was the fact that Abdullah
Badawi was briefly associated with Razaleigh’s backers, but not with
Semangat ’46.
44. There were definitely multiple benefits to this—Malays would benefit and
the state could practice a more socialist development strategy. This would
provide some distance from “Western” economic prescriptions and greatly
increase the power of the state.
45. For more on this, see Edmund Terence Gomez, Corporate Involvement.
46. Why did the Chinese tolerate the NEP and the redistribution of wealth to
Malays? This was clearly an infringement on their economic interests and
property rights. Professional Chinese who I met in Kuala Lumpur and
Penang in 1996/1997 repeatedly expressed support for the status quo. They
felt that although the government’s policies clearly favored the Malays, pol-
itics was not a zero-sum game. As long as all were doing better, they could
accept the unevenness of it. Most admitted some fear of ethnic violence
(although most thought it would be against property and not against their
persons) if stability was not maintained.
47. For broader international Chinese reaction to the 1998 riots in Indonesia, see
Elaine Tay, “Global Chinese Fraternity and the Indonesian Riots of 1998: The
Online Gathering of Dispersed Chinese,” http://wwwsshe.murdoch.edu.au/
intersections/issue4/tay.html. See section 36 in particular.

Conclusion
1. This statement is not meant to minimize the significant changes and
improvements that have been realized, particularly in Indonesia.
2. As mentioned in the introduction, democratization and the consolidation of
democracy are ongoing processes. I do not believe that there will come one
particular moment in time when one can say that the process of political
reform is complete and finished.
3. Examples of such policies include drastic reductions in government spend-
ing, reductions in subsidies, tighter banking regulations and oversight, and
tighter monetary policy.
4. It should be noted that people in Thailand have largely chosen to ignore
Thaksin’s lying about his assets and have instead decided to see him as the
Notes ● 163

savior of the Thai economy, rather than as an impediment to improving


democratic accountability.
5. South Korea may have had a head start in democratization. However, the
point this book makes is that South Korea, Thailand, and Indonesia all
underwent political reforms as a consequence of the 1997 economic crisis.
The relative openness or degree of liberalization is not really what is being
compared.
6. Robert A. Dahl, “What Political Institutions Does Large-Scale Democracy
Require?” Political Science Quarterly 120, no. 2 (2005): 187–197.
7. Information is from Transparency International’s Corruption Perception Index
for 2004; see the summary on their web site, http://www.transparency. org/
pressreleases_archive/2004/2004.10.20.cpi.en.html.
8. Indonesia was an exception. In 1998 inflation reached upward of 70% in
urban areas.
9. For work on this question, see two works by James Vreeland, The IMF and
Economic Development (NY: Cambridge University Press), 2003, and “The
IMF: Lender of Last Resort or Scapegoat?” Paper presented at Midwest
Political Science Association Meeting, Chicago, IL, 1999.
10. Alastair Smith and James Vreeland, “The Survival of Political Leaders and
IMF Programs.” Prepared for presentation at the Yale University Conference
on The Impact of Globalization on the Nation-State from Above: The
International Monetary Fund and The World Bank, April 7–25, 2003.
11. As discussed earlier, this is an interesting question because Malaysia shared
several of the characteristics of its neighbors; the financial crisis was similar,
there were mass protests, and there were elites who could have taken over for
Mahathir.
12. Liberal economic policies would include a reduction in government spend-
ing, efforts at privatization, and freeing up government intervention in
industrial and monetary policies.
13. Explaining the 1969 riots as a consequence of economic inequities is what
the Malaysian government has consistently done. There is certainly more of
a political explanation behind the riots as well. In the 1969 election opposi-
tion parties did better than in previous elections. Chinese supporters of the
opposition held victory parades in the streets and some even boasted that
now the tables would be turned and the Chinese would have more political
power. These actions prompted a violent response from Malays and
triggered the riots.
14. There is no public opinion data to support this, but it seems like a logical
conclusion given the political economy and ethnic relations in Malaysia.
15. As I discuss in the chapter on Indonesia, there are certainly worrisome forces
trying to undermine the Indonesian state—both militant Islamic groups
and separatist groups would like to see the government fall. While I discuss
these forces as an impediment to further democratization, I do not see any
of these groups as being broad enough to turn the tide against the democra-
tic reforms that have already occurred. It is more that they make it difficult
164 ● Notes

for democratization to be fully reached. In other words, if small militant


Islamic groups or separatist groups were the only problems facing
Indonesian democracy, I would not see them as a hindrance to democratic
consolidation. It is only when these problems are combined with the linger-
ing power of the military and other problems of corruption that I end up
concluding that democracy is not fully realized in Indonesia.
16. As mentioned in the chapter on Indonesia, voter turnout certainly dropped
with each successive election; yet, in comparison with other democracies,
turnout remained reasonably high and the highest participation came in the
July presidential race where about 82% of voters (125–126 million) cast
their ballot. “Yudhoyono Still Ahead in Indonesia Vote Tally, Parties Seek
Allies,” Agence France Presse, July 9, 2004. And, for public opinion surveys
see Hank Valentino and Rakesh Sharma, Indonesia Nationwide Public
Opinion Survey, 2003 (Washington, D.C.: International Foundation for
Election System, IFES).
17. Juan J. Linz and Alfred Stepan, Problems of Democratic Transition and
Consolidation (Baltimore: Johns Hopkins University Press), 1996, 6.
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Index

ABRI 85 political culture 76–7, 85


Abdullah Badawi 22, 25, 119, 125, Malaysia and semi-authoritarianism
162 107, 129–30,
Abdullah Sungkar 103 and legitimacy 141
Abuza, Zachary 103, 157–8 “Axis of Evil” 78
accountability 3–5, 26, 44, 47, 58,
75, 84, 101, 132, 139 Ba’asyir, Abu Bakar 103
Aceh 17, 91, 94, 103, 144 baht 37–9, 47
adapt 116 Baker, Chris 147–8
Albritton, Robert 59, 149 Bali bombing 57, 95, 102, 105
Al-Qaeda 103, 122 Bangkok 29, 31, 40, 46, 52, 56–7,
Al Maunah 119 60, 148
Al-Mukmin 103 Bangkok Post 54
Ambon 17, 94, 134 Banharn 39
Amnuay Virawan 37 banks, banking 133, 135–6, 146
Amon Chanthrasombun 39, 148 closure of 13, 15
Anand Panyarachun 32, 36 South Korean sector 19, 20, 86
Ananda Mahidol (King Rama VIII) 30 Thai Military Bank 50, 57
Angkatan Mujahidin Islam Nusantara foreign lending/debt 61, 66–8, 86
(AMIN) 103 Bank Negara 109
Anwar Ibrahim 23–6, Bank of Thailand 37
and the contest with Mahathir bankrupt 66, 136
108–14 Banten Group 103
and current politics 118–27, Barisan Alternatif (BA) 25, 111–13,
and party politics 162 118, 160
Asian Development Bank (ADB) 20, Barisan Nasional (BN) 24–5, 112–15,
140 117, 120, 123, 126, 162
Association of Southeast Asian Nations, Bhumibol Adulyadej (King) 30–1,
ASEAN 51 40, 147
austerity 6, 13, 23, 37, 47, 108, 113 Bienen, Henry 9
Australian Embassy bombing 95, bird flu/avian flu 58
102, 104 Black May 33, 36
authoritarian (ism) Bloody May 39
transitions from 6–11, 42–4, 124 Buddhism 29, 159
178 ● Index

bumiputera 116 Thailand 35–6, 39, 45–6, 56,


bureaucracy 11, 29, 71, 86 60, 151
bureaucrat 29, 32, 35, 39, 63, 139 “civilizational Islam” (see also Islam
bureaucratic capitalism 88, 93–4 Hadhari) 123
Bureekul, Thawilwadee 59, 149 class 5, 34
Bush, President George W. 57, 78, Clinton, Bill 6
105, 154 coalitions 1, 6, 9, 12, 69, 112, 125
business community 32, 113, 117, Cold War 32–3, 35–6, 77
125, 138 communist/communism 6
Chinese 138 Communist Party 30, 35, 84
Indonesia (PKI) 84
capital controls 23, 109, 113–14 South Korea 77
capitalism 6, 78, 88, 94 Thailand 30–1, 34–6, 148
censorship 32, 92 constitution 10, 64, 68, 72, 74, 89, 116
ceramah 111 Constitutional charter (Thailand) 8,
chaebol 20, 61, 63, 66, 71–2, 76, 18, 30, 36, 38–42, 47–52, 55, 131
79–81, 132 Constitutional Court (Indonesia) 89
Chandra Muzaffar 111 South Korea 74
Chart Thai Party 32, 34, 39, 48 Thailand 49, 51, 54–5, 139
Chatichai Choonavan 32, 34, 42 Constitutional Drafting Assembly
Chavilit Yongchaiyut 37–41, (CDA) 39–40, 148
46–7, 131 Constitutional Front (Thailand) 30
as general 34 Cooperation Party (Thailand) 30
resignation 18 corruption (as a problem for
checks and balances 10, 54, 67, 98 democracy) 11, 44, 98, 129–34,
Chettha Tanajaro 41, 56, 59 139–41
China 38, 77 Indonesia 14, 17, 96, 98, 100–1
Chinese (ethnic) 13–14, 24–5, 30, Malaysia 23, 109–10
84, 86–8, 114, 116–17, 125–6, South Korea 21–2, 63–6, 72,
137–8, 162 153, 155
Cholla 21, 62 Thailand 37, 39, 48–51, 58, 150
Christians 18, 94 Corruption Eradication Commission
Chuan Leekpai 39, 42, 50, 131 (KPK) 100
Chulalongkorn 29 coup(s) (coup d’étate) 6
Chun Doo Hwan 64, 152 Indonesia 84, 155
Chung Mong Jun 22, 73 Thailand 29–36, 50
arrest and trial of 21, 65 credit controls 63, 65
CIA 85 Crescent Star Party 90, 101
civic culture 6 currency 1, 12, 18, 23, 37, 67,
civil rights (social justice) 108–9, 154
civil society (and democracy) 4–6, 11, current account deficit 108
19, 121–2, 125
(and the state) 5, 143 Daewoo 71
Indonesia 84, 91, 97, 102 Dahl, Robert 3, 132
South Korea 69–70 Daim Zainuddin 23, 108–9
Index ● 179

Darul Islam 103 Diamond, Larry 4, 6–7


Dayak 94 dictatorship 31, 35, 65
debt 7, 19–20, 48, 52, 63, 65, 67, Duch, Raymond 5–6, 135
80, 107 Dur, Gus (see also Abdurrahman Wahid)
demilitarized zone (DMZ) 71 14, 17, 124
Democracy Development Committee dwifungsi 85
(DDC) 39, 148
democratic attitudes 10, 58, 76, East Timor 51
98, 138 economic crisis (see also financial crisis,
democratic consolidation 44, 58, currency, and devaluation)
101, 138 5–8, 11, 61, 86, 113, 120,
Democratic Action Party (DAP) 135, 142
(Malaysia) 24, 111, 117–18, and democracy 7–8, 19, 25, 36, 39,
121–22 47, 61, 68, 77, 98, 132
Democratic Justice Party (DJP) and demonstrations 8, 11, 17, 48,
(South Korea) 8, 64, 151–2 56, 75
Democratic Labor Party (South Korea) and political in-fighting 12, 43, 48,
151–2 98, 131, 136
Democratic Liberal Party (South Korea) economic growth 15, 35–6, 67, 71,
65, 152 91, 133, 140
Democratic Party economic society 11
Indonesia 90 elections
Indonesia (in Struggle) (see also 1999 (Malaysia) 1–2, 112–14
PDI-P) 14, 85 1999 (Indonesia) 90, 156, 158
South Korea 151–2 Election Commission 49, 52,
Thailand 39–40, 42, 45–6, 54 55, 131
Democratic Republican Party (South Indonesian election commission 100
Korea) 65, 151 elites 4, 106, 113, 117, 121,
democratization (see also transition to 124–7, 142
democracy) 3–5, 7–8, 9, 11, 35, government elites 6–9, 14, 25, 29,
56, 121, 136, 138–40 43, 48, 54, 68, 76, 79
Indonesia 17, 163–4 elites in society 22, 32, 36
Malaysia 129 rural elites 41
South Korea 63–4, 68–70, 80, 131 ELSAM (Lembaga Studi dan Advokasi
Thailand 50 Masyarakat) 92
demonstrations 8, 116
Indonesia 13, 16–17, 86–87, 102 F-16 51
Thailand 18 factionalism 34, 74, 84, 91, 93
Malaysia 23–4, 109–11 Fadzil Noor 119
South Korea 68–70, 146, 152 Fifth Republic 64
devaluation (currency) 12, 23, 38 Finance Ministry (Thailand) see also
developmentalism 63 Ministry of Finance 37
Dewan Perwakilan Rakyak (DPR) Financial Crisis (see also economic crisis)
(lower house) 85, 89, 93 18–19, 36, 47–8, 78, 94, 129, 133
Dhume, Sadanand 158 Fish, Steven 69
180 ● Index

foreign debt 67 Indonesian Legal Aid Foundation 92


Forum Komunikasi wal Sunnah wal IMF (International Monetary Fund)
Jamaah 95 9, 11–12, 20, 26, 136–8
Free Aceh Movement (GAM) 94 Indonesia and the IMF 13–17,
86, 96
Gagasan Demokrasi Rakyat 111 Malaysia and the IMF 22–25,
Gasiorowski, Mark J. 7, 135 108, 114
Gerakan 111, 117 South Korea and the IMF 20–1,
Gersovitz, Mark 9 67, 75, 78
Gestapu 84, 155 Thailand and the IMF 17–19,
global capital 36, 46, 78, 80 37–8, 46–7, 60
globalization 19, 56–7, 104 Imparsial 92
Golkar 14, 85, 91–2 impeachment/ed
good governance 38, 81, 119, 133, Roh 74
139, 141 Suharto 16
Gourevitch, Peter 9 Wahid 14, 89, 156
Grand National Party (GNP) (South Indonesian Election Commission 100
Korea) 19, 62 Indonesian Nationalist Party (PDI) 85
Gross Domestic Product (GDP) 66, 140 inflation 7, 15, 16, 135, 163
Institute for Public Policy Studies
Habib Rizaq 102 (IPPS) 39
Habibie, BJ 13–14, 16, 88, 124 interest articulation 5, 70
Haggard, Stephen 44, 48, 97 Intergovernmental Group on Indonesia
Hambali 57 (IGGI) 85
Hamid, Awaluddin 100 Internal Security Act (ISA) 24,
Hamzah Haz 105 110–12, 119
Hanbo 61, 66, 146 international investors 19, 26, 37, 47,
Hanvit Bank 72, 153 60, 121, 135
hard-liners 4, 124–5 Iraq 57, 103–5
Harmoko 16 Islam 101, 159
Harymurti, Bambang 91–2 and democracy 120, 122–3
Hasan, Bob 13, 145 militant 102–4, 141
Hong Kong 20, 108, 135 moderate 102
Hudud 123 Islam Hadhari (see also civilizational
Humanika 92 Islam) 123
Huntington, Samuel 5–6, 43, 124, Islamic Defenders’ Front (FPI) 102
136, 149 Islamic law 90, 101–2, 122, 134
Islamic state 90, 102–4, 111, 118, 122–3
independence 17, 86, 94, 113–14, 116
of media 91 Jakarta 13, 16, 87, 102–3, 106, 159
of judiciary 126 Japan 38, 85
Indian community (Malaysia) Jemaah Islamiya (JI) 56, 95, 103–5, 157
24, 116 Jones, Sidney 156–7
Indonesian Democratic Party in
Struggle (PDI-P) 14, 17, 88, KCIA 153
90–1 Kalla, Josef 91
Index ● 181

Kartasasmita, Ginandjar 16 political 3, 26, 44, 56, 60, 68, 79


Katzenstein, Peter J. 9 Linz, Juan 6–7, 10–11, 44,
Kaufman, Robert 97 138–9
Kavi Chongkittavorn 54 local government 83, 151
keadilan (justice) 109 Londregan, John 5–6
KeADILan 25, 111, 115, 118–22
Keadilan Sejahtera (Prosperous Justice madrassa 95, 103
Party, Indonesia) see also PKS, 90 Madurese 94
Kelantan 112, 119, 122–4 Mahathir, Mohammad (Prime Minister
Keohane, Robert O. 9 Mahathir) 8, 22–6, 107–123,
Khalid Jafre 110 126, 134, 137, 162
kharaj 118 Mainwaring, Scott 43
Kia Motors 19, 61 Majelis Mujahidin Indonesia
Kim Dae Jung (DJ) 8, 19–21, 25, 64, (MMI) 103
66–7, 69–70, 72–3, 76, 79–80, Majelis Permusyawaratan Rakyak
132, 152–3 (MPR) (Upper House) 85,
Kim Jung Pil 21, 25, 67, 69, 75, 153 89, 93
Kim Young Sam 8, 19–20, 64–6, 68, Majlis Gerakan Keadilan Rakyat
75, 79, 154 Malaysia 111
KKN (Korupsi, Kronyisma, Malaysia Airlines 23, 108
Nepotisma) 109 Malaysian Chinese Association (MCA)
Korea Federation for Environment 114, 117
Management 70 Malaysian Indian Congress (MIC)
Korea First Bank 66 114
Kristoff, Nicholas 76 mantiqi 104
Kuala Lumpur 24, 110, 162 Mar’ie Muhammad 15
Kuala Lumpur Stock Exchange Marriott Hotel bombing 95, 102,
(KLSE) 108 104
Kumpulan Militan Malaysia (KMM) media 20, 43, 50, 53–4, 58, 80, 91–2,
119 110–12, 115, 126
Kwangju Massacre 64–5, 68, 152 Megawati Sukarnoputri 14, 17,
Kyongsang 62 88–91, 93, 102, 105
middle class 5, 40, 59, 109, 125,
labor unions/ labor activism 12, 21, 148, 161
25–6, 32, 62, 64, 68–9, 74 militant groups 17, 26, 56, 94,
bin Laden, Osama 105, 122 101–5, 122, 134, 159, 163
Laskar Jihad 94–5 military as political actor 12, 99,
Laskar Jundulloh 103 133
Latin America 7, 48 Indonesia 16–19, 84–6, 88, 92–4,
Lee Hoi Chang 19, 21–2, 73 97, 133–4
legitimacy 7, 9, 50, 54, 77, 109, 113, South Korea 65–6, 152
124, 139, 141–2 Thailand 29–36, 41–3, 45–53,
Liberal Democratic Party (LDP) 56–7, 148
(Japan) 65 Millennium Democratic Party (MDP)
liberalization (South Korea) 21, 152
economic 15, 32, 107 Milner, Helen 9
182 ● Index

Ministry of Finance (MoF) 19, 65 nongovernmental organizations


mobilization 6–9, 48, 68–70, 75 (NGOs) 10, 33, 35, 39, 56, 69,
modernization theory 4 91, 102, 111, 115, 121
monarchy 32, 35 nonpartisan 18, 89
money politics 18, 56, 63, 65, 74, North Korea 26, 71, 78–9, 80, 154
122, 129–32 NATO (non-) (North Atlantic Treaty
Muhammadiyah 101, 124, 159 Organization) 57
multinational corporations (MNCs) 78
Mulukus 95–6 OECD 66
Munawar Anees 110 O’Donnell, Guillermo 43, 143
Muslim, Indonesian 16, 88, 90, 94–5, Open Our Party (URI) 74, 151–2
102, 104–5, 124, 159 opposition 1, 4, 6, 11–12, 22, 81
Malay 110, 116–19, 123 Indonesia 91, 96, 98
Thai 55–6, 58 Malaysia 24–5, 110–15, 117,
120–2, 161–3
Nahdlatul Ulama (NU) 101, 124, 159 South Korea 8, 20, 63–4, 72
Najib Razak 120 Thailand 18, 20, 40, 42–3, 46, 54
Narathiwat 55 outcome-oriented approaches 3
Nation, The 54
National Assembly (South Korea) 62, Papua 17, 88, 95, 134
72, 74, 152 Park Chung Hee 63, 71
National Awakening Party (PKB) 14, paramilitary (groups) 93, 96, 99, 104,
88, 90, 101 106, 157
National Congress for New Politics parliament – Indonesia 14, 17–18
(NCNP) (South Korea) 66 Malaysia 1, 8, 24, 112, 114–15
National Counter Corruption South Korea 67, 72, 89–91
Commission (NCCC) 49, 51 Thailand 34, 39–42, 48–51, 54,
National Development Policy 116 58, 131 (dissolution of Thai
National Integrity Plan (NIP) 119 parliament 31)
National Justice Party (Malaysia) see also Partai Rakyat Malaysia (PRM) 111
KeADILan, 24 participation 4–5, 7, 35, 63, 91, 164
National Mandate Party (PAN) 14, PAS (Partai Islam se Malaysia) 8, 11,
88, 90 14, 18–19, 24–5, 111–24, 134,
national security 19, 62, 74, 92 137
National Security Law 74 patron-client ties 97
National Vision Policy 116 Pattani 55–6
Nawapon 35 People’s Alliance for Democracy
Negara Islam Indonesia 103 (PAD) 56
New Aspiration Party (Thailand) 42 People’s Consultative Assembly (MPR)
New Economic Policy (NEP) 116–17, 14, 85, 89, 93
125–6, 161–2 People’s United of the Twenty-First
New Korea Party 61–2, 66, Century 73
152 Pergerakan Keadilan Sosial (ADIL)
New Order 85, 87–8, 92, 95, 100 (social justice movement) 111
9/11 2, 57, 78, 102, 118 PERMANTAU (Malaysian Citizens’
Nobel Peace Prize 72 Election Watch) 112
Index ● 183

Phahon (Phraya Phahonphyuhasena) 29 replacement 43


Phao 30–1 Replita 86
Phibun (Luang Plaek Phibunsongkhram) Rerngchai Marakanond 37
29–30, 34, 147 Reunification Democratic Party (RDP)
Phongpaichit, Pasuk 147–8 (South Korea) 20, 65, 152
police 13, 16–17, 24, 31, 33–4, 52, Rhee In Je 21, 66–7
54–5, 74, 87, 92, 94, 96, 101, ringgit 23, 108–9, 134
110–12, 119, 139, 159 riots 13, 14, 16, 87, 116, 118, 126,
political reform (see also transition to 137, 161–3
democracy) 1, 3, 104, 121, 136 Roh Moo-hyun 22, 73, 80, 132
Indonesia 14, 83–4, 98 Roh Tae Woo 20, 64, 68, 131
Malaysia 23, 109, 120 rule of law 3, 11
South Korea 68
Thailand 39–40, 46–8, 60 Sanoh 41, 45
politicization 7–8, 75, 96, 109, 111 Sanya Dharmasakti 31
politicized Islam 88, 93, 95 Sarit 30–1, 34
Pongpol Adireksarn 48 Schedler, Andreas 10, 98
Pool, Keith T. 5–6 Schmitter, Philippe C. 4, 136, 143
Prajadhipok (King) 30 second image reversed 9
Prem Tinsulanonda 32, 34, 45 sectarian violence 91, 94, 97, 134
Pridi Panomyong 29–30 Senate (Thai) 32, 34, 40, 48–9
proportional representation 49, 62, 72 Indonesia 89
protests 1, 12, 26, 106–7, 133–5 separatist movements/violence 11, 17,
Indonesia 13–16, 74, 81, 86–8 55–6, 97, 144
Thailand 18, 24–5, 43, 46, 51, 148 Share, Donald 43
South Korea 19, 64, 67–9, 152 Shin Corporation 54, 58
Malaysia 24–5, 109, 121–6 Shin, Doh 76
Przeworski, Adam 5–6, 43, 136 Sin Chew Jit Poh 115
public opinion 10, 22, 46, 50, 57, 66, Singh, Karpal 118
76, 154, 158 Sjamsuddin, Nazaruddin 100
radical groups 17, 19, 43, 100, Smith, Alastair 136, 163
102–5, 122, 146 social welfare 54, 60, 91, 100, 102,
radical reformers 43 139–40
Soros, George 23, 108
Rais, Amien 14, 88, 124 south, of Thailand 55, 57–8
Rakyat Malaysia 111 standpatters 43
red cards 52 Star, The 115
Red Gaurs 35 State Intelligence Agency (BIN) 92
reforms (see also liberalization) Stephan, Alfred 10–11
political stock market 1, 11, 20, 39, 67
economic students 13–14, 16, 19–20, 26,
reformasi 83, 88–90, 107, 110, 31, 34–5, 64, 67–8, 78, 87,
117–18 116, 146
regime change 2, 7, 11, 135, 137 subsidies 3, 15, 37, 47, 87, 96, 133,
regionalism 63, 65, 72, 74 136, 162
Remmer, Karen 6, 7, 48, 135 Suchinda Kraprayoon 32, 36, 147
184 ● Index

Suharto Ungpakorn, Ji Giles 35


1997/98 crisis 8, 13–17, 83, 86–8, United Liberal Democrats (ULD) (South
95–8, 138, 157 Korea) 21, 66, 72, 151, 153
pre-1997 politics 84–6, 89, 133, UMNO (United Malays National
155, 159 Organization) 2, 25, 112–20,
Sukarno 14, 84 122–3, 125–6, 134, 137, 162
Sukma Darmawan 110 United States 26, 55, 57, 60, 99, 140
sunshine policy 71–2, 77 relations with Indonesia 95, 105
Suranand Vejjajiva 58 relations with Malaysia 119
Surayudh Juranondh 50 relations with South Korea 77–80,
Surin Pitsuwan 45 140
Suriya Jungrungrengkit 54 relations with Thailand 31, 33, 51
Unity Development Party (PPP) 85
Tan Sri Ahmad Mohd Don 109
Tan Sri Rahim Noor 110 Veera Prateepchaikul 54
Tanjung, Akbar 16 village scouts 35
Tarbiyah 102 Virabongsa Ramangkura 38
technocrats 15, 86 vote buying 18, 39–40, 52, 97, 130
television/TV 33, 50, 53, 73 Vreeland, James 136, 163
Tempo 91
Tentara Nasional Indonesia (TNI) 92–5 Wahhabism 103
Terengganu 112, 119, 122 Wahid, Abdurrahman 14, 17, 87,
territorial integrity 88, 93–4 92, 133
Thai Nation Party 42 Wan Azizah Wan Ismail 24,
Thai Rak Thai (TRT) 51, 54, 58, 60 111, 120
Thaksin Shinawatra 18, 51–4, 56, Wantan 115
60, 131 war on drugs 52–3, 58
and corruption 10, 51, 53, 58 war on terror 2, 55, 57, 99, 134, 141
2006 54 weapons 31, 33, 50, 55
Thalib, Jafar Umar 95 chemical 79
Thammasat University 31, 34–5 nuclear 78–80, 140
Thanin Kraivichien 32 wmd (weapons of mass
Thanom 31 destruction) 79
Thanong Bida 37 West Kalimantan 94, 96
transformation 43, 97, 132, 146 Widjoyo Nitisastri 15
transition to democracy 4, 7, 69 Wintata, Tommy 91–2
transparency 15, 26, 38, 47, 68, 75, Wiranto 16, 92–3
80, 100, 132–3, 139, 155 World Bank 20, 85, 108, 158
Transparency International 100, 133, won (Korean currency) 20, 67
155
transplacement 43 Yala 55
Trisakti University 14, 87 Yayasan Indonesia Sejahtera 101
Tunku Razaleigh 162 Yudhoyono, Susilo Bambang (SBY)
88, 90–2, 100, 105, 159
ultranationalist 31
unemployment 15–16, 66, 71 Zainur Zakaria 118

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